Insurance companies must draft their policies with the highest degree of precision, because ambiguities are typically resolved in favor of the policyholder. In certain property and casualty cases, vague language or an oversight regarding a particular type of loss can trigger exposure valued in the millions of dollars. A coverage case in Kentucky’s highest court demonstrates how even when the carrier has a reasonable interpretation of a particular clause, it could be liable for a substantial loss. 

In State Auto Property & Casualty Co. v. Greenville Cumberland Presbyterian Church, the Kentucky Supreme Court reviewed a claim involving a structure approximately 120 years old. After church members noticed that fasteners on the metal roof were rusting, an engineer was brought in. He reported that due to water damage, the trusses supporting  the roof had given way, meaning that the roof was only being held up by the ceiling and roof cross framing. Emergency repairs were undertaken to prevent the roof from falling through the ceiling, possibly destroying the building.  

While the State Auto policy included coverage for the “collapse of the building or any part of the building,” it denied the claim, arguing that the emergency repairs did not constitute a “collapse” as defined under the policy. After differing results at the trial and appellate levels, several issues were presented to the Kentucky Supreme court, including:

  • Definition of collapse — In support of its denial, State Auto said that because the church had not fallen down abruptly, the incident could not be considered a collapse. Kentucky, unlike many other states, does consider an imminent collapse as a collapse. After reviewing case law and noting that the policy did not define “collapse,” the court held that what occurred at Greenville Presbyterian could qualify.

  • Partial vs. total collapse — A key element of the court’s ruling was that the policy expressly covered the collapse of “any part” of the building, which included the roof. Even though the entire building did not crumble, the court found that the roof’s structural failure fell squarely within the policy’s scope of coverage.

  • Mitigation of damages clause — The church argued that because it was required by the policy to mitigate damages where possible, it should not be punished for taking emergency measures to avert a full collapse.   

Upon their review of relevant legal and factual issues, the justices held that coverage did exist under the State Auto policy for the church’s roof problem. However, given the precedential decisions, even very slight changes to the terms would likely have led to a different outcome. 

The attorneys at Pullin, Fowler, Flanagan, Brown & Poe provide coverage opinions and insurance defense representation to carriers throughout West Virginia, Kentucky and Ohio. For a consultation regarding your issue, call us at 304-344-0100 or contact us online.