In Rector Street Food Enters. v. Fire & Cas. Ins. Co. of Conn., the plaintiff insured’s building was shown to have had two- to three-inch-wide cracks in its facade and was sinking, out of plumb.  The City ordered the owner to make the building safe to the public by either demolition, fixing the condition, or whatever means were necessary.

The building was demolished, and the event resulting in the loss was not covered under the subject insurance policy by the provision of defendant insurer’s policy insuring against loss attributable to "abrupt" collapse.  The subject policy specifically defined its additional coverage for collapse with respect to buildings as meaning "an abrupt falling down or caving in" and provided that "[a] building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion."

The Appellate Division, First Department upheld the denial of coverage based on the unambiguous language of the collapse provision.  Notably, the Court found unpersuasive the plaintiff insured’s public policy argument that such an interpretation was against public policy because it undermined building owner’s incentive for public safety as balanced against their interest in having a loss covered by an insurance policy.