In Stock v. Allstate Insurance Company, 1 the policyholders thought they had done everything right. They bought a Deluxe Plus Homeowners Policy from Allstate. They lived in a house on stilts along the Pacific Coast Highway in Malibu. When their home started to literally lean, they got a professional engineer involved, found it was unsafe, evacuated the premises, and filed a claim under the policy’s “collapse” coverage. After all, the policy promised coverage for the entire collapse of part of the structure if caused by hidden decay or the weight of contents. But when they turned to Allstate, they got a corporate shrug and a denial letter with one finger, rather than helping “good hands.”
What was Allstate’s position? The beam hadn’t “entirely collapsed.” There was just some bending, twisting, warping, and, yes, corrosion. But it hadn’t fallen to the ground in a cinematic heap. And even if it had, Allstate argued, the loss wasn’t “sudden and accidental.” Rust, they said, takes its sweet time. It’s not like the beam had a heart attack; it had a slow-motion breakdown. So, despite offering coverage for collapse due to “hidden decay,” Allstate invoked exclusions for “rust or corrosion” as though decay could be divorced from its metal-munching cousin.
The plaintiffs were understandably confused and argued that the policy doesn’t define “collapse.” Yet, Allstate seemed to insist on a definition so narrow that it excluded anything less than total obliteration. The steel beam, according to the policyholders’ engineer, had failed in engineering terms. That is, it could no longer perform its intended function by holding up the house. It had to be replaced, and the entire structure was at risk of following it into the surf.
In many jurisdictions where collapse is defined as a loss of structural integrity, this may be so. The Allstate customers also thought so, and they argued that the policy should be interpreted to cover what actually happened, because a part of the structure had entirely failed as a result of hidden decay, just as the policy’s wording covering “loss by hidden decay” provided.
Unlike the claims advertisements with Mayhem promising coverage when others do not pay, Allstate claims managers and their attorneys were having none of it. In court, they doubled down, arguing that no “entire collapse” had occurred, just “substantial impairment,” which they said was insurance-speak for “nice try.” They also pointed to the visibility of some rust, arguing the decay wasn’t truly hidden. And while the plaintiffs insisted that the sudden and accidental part referred to the loss and having to unexpectedly flee from their home without previous warning, Allstate wanted the wording to mean the collapse itself had to be instantaneous, like a trapdoor. Allstate maintained that decay caused by rust is never “sudden” as required by the policy wording.
The court, applying California law, largely sided with the insurer. It held that the policyholders hadn’t demonstrated an “entire collapse” of part of the structure. Twisting and deflecting, even with severe rust, did not meet the policy’s threshold so long as it was still standing. The court wasn’t swayed by the semantic tap dance about whether it’s the loss or the collapse that must be sudden. Either way, said the court, decay caused by rust just doesn’t cut it.
The court was also unimpressed with the policyholder’s handling of the claim investigation, noting delays in providing documents and reports and denying timely access to the damaged property. In the end, the judge granted summary judgment to Allstate, leaving the homeowners out of pocket and out of luck.
What’s most curious, some skeptics might say “maddening,” is the logical pretzel Allstate tied itself into. They sold a policy that offered collapse coverage for hidden decay, then denied a claim where the decay caused the collapse on the grounds that rust caused the decay. One might ask, “If hidden decay is covered, but rust and corrosion are not, what exactly are they willing to cover?” Collapses caused by invisible metal-eating termites performing mime routines? Allstate’s position, while technically defensible under the policy language and as proven by the court’s ruling, reads more like a Kafkaesque riddle than a good-faith promise.
The bottom line is that every time a consumer sees the Mayhem advertisement this fall during football games, they should think about this case. Allstate does not pay, just like many other insurers. It will hire lawyers to argue its finely worded policy language in court, and people purchasing Allstate should be warned that Allstate is just like a lot of other mass advertising insurance companies. This case serves as a reminder that policyholders shouldn’t assume that promises made in advertising mean anything. Allstate does not have Mayhem advertise the tens of thousands of times that Allstate has adopted a hard stance denial based on finely worded policy language.
Insurers, for their part, might want to reconsider offering collapse coverage with a hidden decay hook if they’re just going to reel it back in with a rust exclusion. After all, when metal decays, it is usually from rust. Pretending otherwise isn’t just wordplay, it’s a coverage denial dressed up as logic. The collapse coverage is much less today than it was a few decades ago.
If nothing else, Stock v. Allstate proves that when it comes to insurance policies, definitions matter, inspections matter, and semantics matter. Because in the world of collapse coverage, what falls down or is about to fall down might not be covered, unless it does so in just the right way, potentially killing the policyholder, which may provide property coverage for the estate to collect.
Collapse coverage is complex. We have written a number of articles on the topic, and I suggest using the blog’s search function if you are interested and want to learn more from blog articles such as the one written by Larry Bache, Collapse Claims Make National Headlines – Clearing Up Collapse Coverage, Part IV.
I will write more about Allstate’s Mayhem and how the mass advertising insurers are killing public trust in the insurance product. Don’t buy insurance because you like the advertisement.
Thought For The Day
“Mayhem doesn’t intend to do harm. Mayhem is just random stuff that happens—teen driver, a puppy in the backseat, a random windstorm.”
—Lisa Cochrane, Allstate Senior Marketing VP
1 Stock v. Allstate Ins. Co., 2:23-cv-08780 (C.D. Cal. July 14, 2025).
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