“Collapse” And “Risk Of Direct Physical Loss Involving Collapse” Do Not Have The Same Meaning

In Equinox on the Battenkill Management Association, Inc. v. Philadelphia Indemnity Insurance Company, Inc., 2015 VT 98 (August 7, 2015), the Vermont Supreme Court reviewed case law in other states in order to interpret coverage under an insurance policy for “collapse” and “risk of direct physical loss involving collapse.”

Issue: Plaintiff appealed a summary judgment order denying insurance coverage for structural issues in the condominiums’ balconies. This case turned on the interpretation of policy language.

Holding: The Court reversed and remanded, holding that the policy at issue in this case was broader than in Gage v. Union Mutual Fire Insurance Co., 122 Vt. 246 (1961). In this case, the policy covered “collapses” and “risk of direct physical loss involving collapse,” which cannot have the same meaning. After reviewing case law in other states, the Court struck a middle ground and held that “risk of direct physical loss involving collapse” includes coverage where there is “a risk of imminent collapse.” The case was remanded to address a number of unresolved legal and factual issues arising from this decision.

Concurrence: Robinson, J., concurred, taking issue with “puzzling” language at the end of the majority opinion that indicated that there may be further ambiguity in the contract. She recommended that the Court rule on any legal remaining issues that had been fully briefed and may be dispositive to the case, even though the trial court never reached the issues.