Balcony Collapse Underscores Importance of Risk Mitigation

Heavy rains are the suspected culprit of a third-floor balcony collapse at a residential building in Los Angeles, California, on Feb. 15 that impacted four individuals and their dog. Neighbors told KTLA they were awoken by the sound of the collapse and went onto their own balcony to find the “surreal” scene. They called 911 and rushed to help the residents, who were trapped under furniture in the corner of the balcony. One woman was treated for a wrist injury and the others, including the dog, were “shaken up” but not harmed, according to reports. 

While balcony collapses are relatively rare in well-maintained buildings, they are more common when structural integrity is compromised due to age, poor construction or overloading, said Barry Whitton, Managing Director, Broker, Property, Burns & Wilcox Brokerage, Atlanta, Georgia. 

“Oftentimes, there may be faulty workmanship of some magnitude in addition to having way too many individuals out on the deck at the same time, though that did not seem to be the case here,” Whitton said. 

Owners of apartment buildings and condo complexes that experience this type of incident could have coverage for repairs and potential lawsuits under insurance policies such as Commercial Property Insurance and Commercial General Liability (CGL) Insurance. 

“This is a prime example of why insurance is needed,” said Atef Shah, Associate Manager, Commercial & Personal Insurance, Burns & Wilcox, Toronto, Ontario. “We do not know why this happened. It can be tough to tell who is responsible and what policy would respond, but everyone involved [in the building] could be drawn into a lawsuit.” 

This is a prime example of why insurance is needed. … It can be tough to tell who is responsible and what policy would respond, but everyone involved [in the building] could be drawn into a lawsuit.

The cost of injuries, lawsuits 

Residential balcony collapses can cause catastrophic losses. One of the most notable incidents occurred in 2015, when a fifth-floor apartment balcony in Berkeley, California, collapsed during a birthday party attended by Irish students, killing six of the 13 individuals who fell from the structure and injuring seven others, CNN reported. According to structural engineering firm The Sterling-Watson Collective, investigations revealed the cause of the collapse was the failure of wooden beams damaged by dry rot, with other contributing factors including water intrusion, poor construction practices, and lack of inspections and maintenance. At least 13 lawsuits were filed in connection with the incident, ABC 7 News reported. 

Last summer, one individual suffered a traumatic injury when a second-story balcony collapsed at an apartment complex in Franklin, Tennessee, WZTV Nashville reported in July. In 2021, a balcony at an apartment building in Hermitage, Pennsylvania, collapsed, trapping and injuring one resident and prompting the complex to close off all balconies until further notice, WFMJ reported.  

While the cause of the recent Silver Lake neighborhood collapse is still under investigation, inspectors said recent heavy rains may have damaged the structure, news outlets reported. “It begs the question of how old the building was and whether there were any structural concerns at the time,” Shah said. “If something like that happened to one balcony, a property manager would 100% want to have all of them inspected. If it was due to faulty workmanship, all of them might be compromised. If it was due to a natural disaster, it would be interesting if only one was affected and not the others.” 

If something like that happened to one balcony, a property manager would 100% want to have all of them inspected.

After these incidents, a building owner’s CGL Insurance could help pay for injured individuals’ medical expenses, as well as legal defense and settlements in the event a lawsuit is filed. Excess Liability Insurance may also be helpful, providing additional liability limits beyond standard policies. The risk of injuries is “absolutely” the most costly aspect of the loss, Whitton said, particularly with the “litigious society in the U.S., where payouts are usually a lot higher.” 

In addition to the building owner, lawsuits filed after a balcony collapse could name the property manager, builder, architect, and condo association, among others. This could lead to a long process of subrogation, Shah said, and it could also trigger other policies such as Errors & Omissions Insurance and Directors & Officers Insurance. 

“Everyone would likely be tied in and get involved in that lawsuit,” Shah said. “If the incident resulted in death, it could be a pretty big lawsuit at that point and anybody that had insurance would get pulled into it. There are a lot of layers of how it could work out.” 

Faulty workmanship may be excluded 

The property damage caused by a balcony collapse, including damage to the structure itself, as well as any property damaged below it, could be covered by a building owner’s Commercial Property Insurance. The repairs could total in the thousands to hundreds of thousands of dollars, depending on the size of the balcony and the extent of the damage, Whitton said. 

“Commercial Property Insurance could take care of the physical part of the deck breaking away from the building,” he said. However, the cost of repairs may not be covered if the balcony failure was due to faulty workmanship, Whitton noted. “Very seldomly do I see these being a covered cause of loss from a property perspective,” he said. “Oftentimes, the maintenance to the deck has not been taken care of or there is a faulty workmanship installation.” 

Very seldomly do I see [balcony collapses] being a covered cause of loss from a property perspective. Oftentimes, the maintenance to the deck has not been taken care of or there is a faulty workmanship installation.

Other common types of property damage losses in housing complexes include fires due to kitchen appliances, outdoor grills and candles, Whitton said. Water leaks are another major source of Commercial Property Insurance claims. “In apartment spaces and condos, a lot of property owners have been banning outdoor grills because they are continuously seeing fires from that scenario,” he said. “Water damage that can come from the tenant above, like an overflowing tub or sink, causes a lot of water damage within the habitational space.” 

Regular inspections, maintenance needed 

According to Shah, property owners and managers should ensure they understand the coverage provided under their insurance policies, including any exclusions. “It is very important to know what your policy actually covers,” he said. “You do not know what could happen. We cannot anticipate a balcony collapsing, for example, but if there was a liability claim and you did not have insurance, all of that is going to be paid out of pocket.” 

The bottom line is if [building owners] are pulled into a lawsuit and records indicate that things were not being taken care of, they may be found at fault.

They should also keep up with regular inspections and maintenance on their properties, Whitton said. “The bottom line is if owners are pulled into a lawsuit and records indicate that things were not being taken care of, they may be found at fault,” he said. “The capital cost of upkeep is a big component. The margins on a lot of these portfolios are pretty thin and the cost of insurance has gotten a lot higher in the last two to three years. Balancing how they spend their money is an ongoing battle these days, but maintenance and upkeep of the building are very important.”