Insurers’ Motion for Summary Judgment on Collapse Claim Granted in Part, Denied in Part

    The insurer's motion for summary judgment on the insured's collapse claim was partially granted, but mostly denied. LDG Rentals, LLC v. Western World Ins. Co., 2025 U.S. Dist. LEXIS 117063 (D. Kan. June 18, 2025). 

    LDG Rentals, LLC purchased a two-story, 125 year old building. LDC sought coverage for the building through its agent, Acrisure. The agent inspected the building and said calculations were needed to determine the cost of rebuilding the structure with modern pricing. The agent, however, never performed any calculations, and based his coverage recommendation on the prior owner's insurance coverage. A $200,000 policy was recommended. LDG accepted the recommendation and purchased a policy with Western World with limits of $200,000. 

    A few weeks later, the north wall of LDG's building partially collapsed. A claim was submitted under the policy. Western World hired an investigator, who found that the collapse was caused by deterioration of mortar around bricks. A structural engineer then determined that the collapse resulted from long-term age-related deterioration and the failure to maintain the structure. Western World denied coverage. 

    LDG filed suit. LDG argued the policy covered a collapse that was abrupt and caused by "building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse." Western World moved for summary judgment. 

    Western World first argued the building was not "Covered Property." The policy defined the term to exclude "property which was damaged prior to the inception date of the policy and which has not been completely repaired or replaced."  Western World maintained that the building was not Covered Property because it was damaged years before the collapse and it was never repaired or replaced. 

    The court noted that inspections were made of the building before it was purchased and no obvious or visible damage was noted. Therefore, disputed issues of fact precluded finding that the building was damaged before the collapse. 

    Western World next argued there was no coverage based on a provision that covered a collapse caused by "building decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse." Again, disputed issues of fact precluded summary judgment. There was conflicting evidence regarding whether the building collapsed due to hidden decay.

    Western World also argued that the building collapse was not a fortuitous event. There was no evidence, however, to suggest that LDG was aware of any damage to the building. Further, there was no evidence that anyone who inspected the building before the collapse had any awareness of prior damage. This evidence pointed to a genuine dispute of fact as to whether LDC had knowledge of the decay. 

    The court did, however, agree with Western World that LDG's request for reformation of the policy should be denied. There was no evidence that both Western World and LDG were mistaken about the contents of the policy. Western World offered and LDG agreed to pay for a policy with $200,000 of coverage. There was no evidence that LDG and Western World understood that the amount of coverage would be – as LDG asserted – replacement value.

    Therefore, Western World's motion for summary judgment was granted in part, denied in part.