Supreme Court Decisions On Crumbling Foundations Exempts Insurers

In rulings with grim financial consequences for tens of thousands of homeowners, the state Supreme Court concluded in decisions released late Tuesday that language common to most homeowner policies exempts insurers from having to cover repairs to homes with structural damage caused by crumbling concrete foundations.

One expert said the decisions could affect the “vast majority” of the 34,000 or so homeowners in eastern Connecticut whose foundations are crumbling and flaking apart because they were poured years ago with a defective concrete mix by a now defunct contractor.

The deterioration is believed to be caused, at last in part, by the inclusion of the mineral pyrrhotite in the concrete mix, according to state investigations. Pyrrhotite has been shown to break down when exposed to oxygen and water.

Insurance companies have routinely denied homeowner claims, asserting that the deterioration does not constitute a structural collapse and leaving victims to spend hundreds of thousands of dollars on repairs. Hundreds of homeowners have sued their insurers, trying to force payment.

The Supreme Court took three of those cases -- two of which had been transferred for resolution of insurance questions from federal courts -- in an effort to resolve the dispute. The court found for the insurers in all the cases after hearing prolonged arguments about arcane policy language concerning the definitions of imminent collapse and foundation.

Although the decisions will not resolve every insurance dispute over a deteriorating foundation, the common language used across policies issued by a variety of insurers could foreclose most homeowners from prevailing in court in the future, lawyers familiar with the issue said.

The court upheld the argument by the insurers that language in the three policies in question excluded coverage for a building collapse -- unless a home already had collapsed or is on the verge of collapse. Structural engineers involved in the three cases before the court had testified that the foundations were compromised and continuing to deteriorate -- but that it could not be determined with engineering certainty whether the homes would collapse in 10, 20, or even 100 years.

The policies also excluded coverage for collapses caused by defective foundations. The Supreme Court found that the definition of foundations includes basement walls, which is where structural weaknesses attributable to defective concrete are found.

Lawyers and other involved in the three cases were not immediately available to discuss the decisions when they were released by the court Tuesday afternoon.

Deteriorating foundations in eastern Connecticut have become an enormously expensive problem that has tied up the courts and the state legislature.

The state has created a fund of more than $100 million, but no one expects that will go far toward solving what experts believe is probably a $1 billion problem.

The state is making $133 million available over five years. The average cost to replace a foundation -- the only cure for the problem -- is $185,000.

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