A stricter construction: in dealing with construction claims, insurance companies cannot be required to pay for damages that are imminent, only those that have occurred.

Policyholders have viewed California as a place where they could convince courts to interpret insurance policies broadly. But in a June 2003 case involving insurance coverage for a structure that was falling down, the California Supreme Court stood firm. The case was Rosen vs. State Farm General Insurance Co.

In the Rosen case, the policyholder repaired decks that were unstable. The policyholder sought compensation for the repair under a policy that covered structural "collapse." The policy, however, defined collapse as "actually fallen down or fallen to pieces." The carrier denied the claim because the structure, though possibly unstable, had not actually fallen down.

The lower courts--the trial court and intermediate level appellate court--found coverage through two arguments that policyholders often raise. First, it was concluded that even though the decks had not collapsed, the collapse was "imminent" and for purposes of coverage, an "imminent" collapse was the same as an "actual" collapse. Second, the courts concluded that public policy required coverage for imminent collapses because society's interests were furthered by making the repair before the structure collapsed.

The California Supreme Court rejected these arguments and enforced the plain meaning of the insurance contract. That court found that equating "imminent" to "actual" would rewrite an unambiguous provision. It would "compel the insurer to give more than it promised and would allow the insured to get more than it paid for, thereby denying their freedom to contract as they please." Thus, the California Supreme Court rejected the lower courts' "imminent" argument.

On public policy, the California Supreme Court noted that while the public might benefit if building owners repaired unsafe conditions before accidents happened, insurance carriers cannot be required to pay for the prevention.

With these simple principles, the California Supreme Court rejected the lower courts' findings and concluded that even though a collapse may have been imminent, it had not happened and thus, it was not covered.

The California Supreme Court's ruling seems straightforward. In fact, the logic can be expressed even more simply.

Insurance contracts, like other contracts, are about line drawing. Parties draw a line between problems: On one side of the line the insurer pays and on the other side of the line the insurer doesn't pay. During this time of year, these circumstances remind me of football. Judges, like football officials, determine on which side of the line something falls. Imagine a football official raising his hands to score a touchdown before a player crosses the goal line because the official believes that crossing the goal line is imminent. Ridiculous.

It's equally ridiculous to apply the "imminent" approach to insurance contract interpretation, if "imminent" or "almost" is accepted, then lines mean nothing, in contracts or anything else.

The public policy issue is similar. Of course, people should maintain their properties to reduce the likelihood of accidents. People should do many good things. But the fact that an act furthers the societal good does not mean that the cost can be imposed on a third party not otherwise responsible.

The public policy approach to interpreting insurance policies would lead to endless expansions of coverage. Society might benefit from oxygen tanks in homes, but that does not mean that homeowners policies must be interpreted to cover the cost of oxygen tanks.

The Rosen case is an important decision that extends beyond its narrow facts became courts considering insurance disputes in other areas have faced arguments based on the concept of "imminent" and "public policy." In environmental insurance coverage claims, disputes frequently have arisen concerning the so-called "owned property exclusion." For example, a tank leaks on the insured's property. The insured files a claim. The insurer sometimes concludes that the leak remained on the insured's owned property and denies coverage. Insureds then often argue that even though the leak is on their own property, an effect on third-party property is "imminent" Additionally, insureds argue that public policy should encourage cleaning the leak--and coverage for the cleaning--before third parties are affected.

The reasoning of Rosen suggests that insureds' owned property arguments should be rejected. "Imminent" and "public policy" do not justify moving the lines in the "owned property exclusion" or other clear contractual terms. Almost is not good enough.

The court's decision to stand firm on shaky decks will allow other courts to enforce the plain meaning of insurance contracts in other contexts.

Alan S. Rutktn, a Best's Review columnist, is a partner in Rivkin Radler LLP, Uniondale, N.Y. He can be reached at [e-mail].