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Court Says Builder’s Risk Policy Limited Coverage for Additional Insureds

In BCC Partners, LLC v. Travelers Prop. Cas. Co. of America, 2024 WL 1050117 (E.D. Mo. March 11, 2024), the Court determined that the plaintiff property owner, as an additional insured, was not entitled to the same insurance coverage as the named insured where the builder’s risk policy limited the scope of recovery for soft costs and rental income. About The Author

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Court Issues First LEG3 Defects Exclusion Decision

Introduction In a case of first impression, the United States District Court for the District of Columbia (applying Illinois law) rejected a LEG3 exclusion as ambiguous.  See S. Capitol Bridgebuilders “SCB” v. Lexington Ins. Co., 2023 U.S. Dist. LEXIS 176573 (D.D.C. Sep. 29, 2023).  The London Engineering Group (“LEG”) is a consultative body for insurers of engineering class risks.  Nearly 30 years ago, LEG introduced a series of defects exclusions, including LEG1, LEG2, and LEG3 (which was revised in 2006).  Each provides increasing levels of coverage, with LEG3 being the broadest.  Generally, while preserving some coverage, LEG3 purports to exclude costs incurred to improve defects of “material workmanship, design, plan, or specification.”  Until now, despite frequent usage in builder’s risk

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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