The First Circuit recently affirmed a Federal District Court of Massachusetts decision, finding coverage applies under a first-party property insurance policy issued to the Easthampton Congregational Church by Church Mutual Insurance Company. The policy contained numerous exclusions, including for “faulty construction,” “rot,” “wear and tear,” “decay,” and “collapse.” However, coverage was added back for collapse losses resulting from decay hidden from view and unknown to the insured before the loss either on its own or when combined with faulty construction.
The insured’s loss involved the collapse of a ceiling due to conditions which were hidden and unknown. The insurer hired an engineer who determined that the causes of loss were the loss of strength of the connection between the nails which attached the ceiling to the joists and the weight of ceiling materials added to the original construction without any additional supporting attachments to the joists. The loss of strength of the connection of the nails was determined to be because of the normal temperature and humidity changes in the building in the subsequent decades.
In its decision, the Court applied three rules of construction regarding insurance policies to find in favor of the insured. First, the word “decay” was not defined in the policy, so the Court relied on dictionary definitions, as mandated by Massachusetts law. Second, the Court noted that “decay” has multiple definitions, one comparable to “rot” and another meaning a progressive loss of strength or soundness. The loss of strength of the connection between the nails and the joists satisfied this second definition. When words in an insurance policy have multiple meanings, the one favoring coverage applies. The Court stated that specific contract terms ordinarily control over general terms. Where the “added-back” coverage for collapse losses specifically applied, the policy’s general exclusions did not. Thus, the insured’s claim was covered in these circumstances.