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Indiana Supreme Court Weighs in on Definition of Collapse and Punitive Damages for Bad Faith

The Supreme Court of Indiana concluded that a good faith dispute concerning insurance coverage does not automatically preclude a punitive damages claim for bad faith when coverage is denied. The court also affirmed the appeals court decision to adopt the modern definition of “collapse” in Monroe Guaranty Ins. Co. v. Magwerks Corp., No. 49S02-0402-CV-81, 2005 WL 1524949 (Ind. June 29, 2005).

Following a period of heavy rain and snow, several roof sections in Magwerks Corporation’s building began to fall to the floor. Magwerks filed a claim with its insurer, Monroe Guaranty, which denied the claim. Monroe claimed that several exclusions and limitations, including wear and tear, decay, deterioration, and defective design, precluded coverage.

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