10th Circuit Finds No Coverage Under All-Risk Policy For Building Damage Caused By Soil Collapse

In Naabani Twin Stars, LLC v. St. Paul Fire & Marine Insurance Co., the Tenth Circuit Court of Appeals held that St. Paul Fire and Marine Insurance Co. has no duty to cover damage that occurred when a building’s underlying soil collapsed, but not the building itself, due to a burst water pipe under an adjacent parking lot.

In July 2016, a waterline under a parking lot, near a building owned by Naabani Twin Stars LLC and Twin Stars Limited, ruptured.

Two geotechnical consultants assessed the damage and found that the water from the burst pipe caused soil compression and settlement, which in turn caused damage to the building — including cracks in the floor, buckling of the exterior, and the inability to open and close doors.

Following the inspection, Twin Stars submitted a claim to Travelers unit St. Paul Fire and Marine Insurance Co., under its all-risk and additional coverages policy.

St. Paul denied coverage, based on its conclusion that the building was not under a ‘state of collapse,’ as per the policy.