Stamm Theatres, Inc. v. Hartford Casualty Insurance

The dictionary definitions of “decay” include a general sense of gradual deterioration in strength or soundness, and a more specific sense of rot or organic decomposition, This case presents the question whether a property insurance policy covering collapse of a building due to “hidden decay” applies to the unexpected failure of wooden roof trusses, with no evidence of rot. We conclude that coverage cannot be ruled out merely because the trusses were not rotten. An insurer promising coverage for collapse due to “hidden decay,” without limiting the scope of the term to organic decay, is liable on claims for any collapse caused by a concealed process of gradual loss in the strength of building materials, unless other policy terms limit coverage. Under this policy and the circumstances of this case, the insured could reasonably expect coverage for an imminent collapse caused by the weakening roof trusses, unless the failure was caused by defective materials or construction methods.

Stamm Theatres, Inc., and its co-owners George F. Stamm and Mary Ann Bolaceo (collectively, Stamm) sued Hartford Casualty Insurance Company (Hartford), among other defendants. Hartford had sold…