HARTFORD, CT —Whether homeowners’ insurance policies should cover repairs to thousands of homes with crumbling foundations caused by defective concrete was the subject of three separate lawsuits heard Tuesday by the Connecticut Supreme Court.
An estimated 35,000 or more homes and condominiums in eastern and central Connecticut, as well as some public buildings, could have failing foundations because of a mineral called pyrrhotite that causes concrete to crack and crumble.
Insurance companies have not been covering the claims filed by homeowners, citing a change in policy that only requires them to cover a “sudden or abrupt collapse.” Whereas the condition involving the crumbling foundations happens over a number of years. According to the insurance companies, this means it doesn’t qualify as a sudden collapse.
Lawyers for homeowners argue that a 1987 Connecticut Supreme Court ruling said “collapse” also can mean impairment in structural integrity.
A federal judge has asked the current Connecticut Supreme Court for a better definition of the word “collapse” that could help decide whether homeowner insurance policies should cover repairs to thousands of homes with crumbling foundations caused by defective concrete.
The three cases for which the Supreme Court heard arguments, in front of a packed courtroom, all involve homeowners; in two cases Liberty Insurance were the policy owners; in one it was Hartford Casualty Insurance.
The cases are:
Chief Justice Richard Robinson asked Michael Parker, lawyer for the two plaintiffs against Liberty, Steven Karas and Steven Vera, whether a home’s foundation is considered part of the overall building structure.
“It is clear that the foundation is part of the building,” Parker told Robinson and the other justices. “All of us have basements under our houses.”
Robinson pressed on, asking Parker how the court should decide on the overall issue.
“This is where the rubber hits the road,” Robinson said. A structure “may collapse, it may not collapse. It may last 50 years.”
Parker’s answer? “This isn’t rocket science. This is basic engineering,” that the foundation is part of a house’s structure and should be covered by insurance if it is poorly constructed.
The majority of the back-and-forth between the lawyers and the justices on Tuesday were about the Karas case. The Karas’ purchased a house in Vernon and several years afterward, according to briefs in the case, they learned that cracks in the concrete basement walls of their house “were caused, at least in part, by a chemical reaction leading to the deterioration of the concrete.”
They submitted a claim under their policy, and Liberty denied the claim on the grounds “that the plaintiffs’ policy does not afford coverage for deterioration.”
Questions by the justices on the reason for denying insurance claims, such as the one submitted by the Karas’, Liberty attorney Robert Kole said it comes to whether a home is in “imminent danger of collapsing.”
“It needs to be about to happen,” said Kole.
Much of Tuesday’s argument centered around a 1987 case (Beach v. Middlesex Mutual Assurance) where the Supreme Court held that the term “collapse” in a homeowner’s insurance policy, when undefined, is “sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity of a building.”
Liberty is contending that the collapse provision is not ambiguous and therefore “that substantial impairment of structural integrity” is not the applicable standard.
Parker countered, however, that in the 1987 the court made it clear that insurers had the right to “redefine” the word collapse in policy to make it less ambiguous.
“It took until 2016 to redefine the policy,” Parker said. “It took 30 years to redefine the policy. Liberty knows very well that it has thousands of policies that predate the change of language in 2016.”
Earlier this year the General Assembly passed a bill that imposes a $12 fee on homeowner policies to help owners of homes with crumbling foundations.
But that money will only raise a pittance of what is needed to address the overall cost of the problem.
Upward of 35,000 plus homes in the north, east, and central parts of Connecticut are facing a potentially devastating issue because of the presence of a naturally occurring iron sulfide originating from a quarry in Willington.
The mineral — pyrrhotite — causes the slow deterioration of concrete foundations when exposed to oxygen and water. While the presence of pyrrhotite indicates the potential for concrete deterioration, its existence alone does not necessarily cause it.
Homes and structures in approximately 41 towns may be affected by what appears to be a slow-moving natural disaster. As a structure continues to deteriorate, it often becomes unsound. Cracking, flaking, bowing, and separation of the concrete has already appeared on some homes built between 1983 and 2015.
The cracking starts small and can take more than a decade to appear. Cracks that go horizontal or splinter out like a web are the most concerning. A rust color or white powder may appear. The drywall in a finished basement may need to be removed to examine the concrete, although the damage is often visible on the outside of the home.
The damage is irreversible. The most effective repair is to replace the existing foundation with a new one that does not contain pyrrhotite. The cost to replace a foundation can differ based on multiple factors, but current estimates range between $150,000 to $250,000 per home.