PMW Real Estate Mgmt., LLC v. State Farm Fire & Cas. Co., 2013 U.S. Dist. LEXIS 109989 (W.D. Pa., 8/5/13)

Collapse coverage afforded for deterioration caused by hidden decay.

The plaintiff argued that the collapse was a covered loss under the “Extensions of Loss” provision, which covered collapses resulting from “hidden decay,” a term that was not specifically defined in the applicable policy. State Farm countered that the plaintiff could not meet their burden of showing that the decay was hidden. The court concluded that the wall was deteriorating, decomposing and/or decaying and that policy exclusions for “losses caused by water, settling, cracking, shrinking, bulging or expansion” did not modify or qualify the additional collapse coverage afforded under Extensions of Coverage. While decay was established, a genuine issue of material fact remained regarding whether the decay was “hidden,” and the court deferred to a reasonable insured standard. Additionally, based on the State Farm adjuster’s cursory evaluation of the property and their expert’s inconsistent testimony, the court concluded a jury could find evidence of bad faith and rejected State Farm’s request for summary judgment.

Case Law Alerts, 4th Quarter 2013