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Digital Edition8th Circuit Upholds Insurer’s Denial of Coverage to Additional Named Insured
The 8th U.S. Circuit Court of Appeals has affirmed a district court ruling that Travelers Property Casualty Company of America rightfully denied coverage to an apartment building owner seeking compensation for lost rental income and soft costs following construction delays.
The decision in BCC Partners LLC vs. Travelers Property Casualty Company of America underscores the critical distinction between “Named Insureds” and “Additional Named Insureds” in construction insurance policies, highlighting important coverage limitations that insurance professionals should carefully consider when structuring project insurance.
BCC Partners contracted with Ben F. Blanton Construction Inc. in June 2015 to build the Vue Project, an apartment complex in Creve Coeur, Missouri. Their agreement required Blanton to obtain insurance, which it did through Travelers. Under this policy, Blanton was designated as the “Named Insured” while BCC was listed as an “Additional Named Insured.”
The dispute arose after a retaining wall failed during construction in December 2015, causing significant damage and project delays. Following the incident, both BCC and Blanton submitted various claims under the policy. While Travelers paid $1.3 million into an escrow account that was distributed among recipients, BCC sought additional compensation for lost rental income and soft costs due to construction delays.
BCC filed this claim in June 2016, and Travelers initially advanced $200,000 while requesting further documentation. After investigating for nearly three years, Travelers denied coverage in March 2019 and reserved its right to recover the advance payment. In June 2022, BCC demanded $1.4 million, representing the unpaid amount up to the policy limits for loss of rental income and soft costs. When Travelers declined, BCC sued for breach of contract and vexatious refusal to pay.
BCC presented several arguments supporting its coverage claim. It contended that as an “Additional Named Insured,” it should receive the same coverage as the “Named Insured.” BCC also argued that the policy language was ambiguous and should be interpreted in its favor. Additionally, BCC pointed out that it made little sense for only Blanton to be covered for rental income losses when Blanton, as the contractor, wouldn’t incur such losses.
Travelers maintained that only a “Named Insured” was covered for such losses, and that an “Additional Named Insured” had a more limited scope of coverage. Both parties filed for summary judgment and the U.S. District Court for the Eastern District of Missouri ruled in favor of Travelers.
The 8th Circuit affirmed the district court’s decision, finding the Travelers policy language clear and unambiguous. The court noted: “Under the plain meaning of the Policy, only a ‘Named Insured’ is covered for such losses. The Policy explicitly states twice that ‘the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations.'”
The appeals court emphasized that the policy created distinct categories with different coverage scopes. As an “Additional Named Insured,” BCC was covered “only to the extent of their financial interest in the Covered Property,” which did not include rental income and soft costs.
While acknowledging that BCC may have anticipated coverage for these losses, the 8th Circuit concluded: “We must enforce the contract before us, not the contract BCC wishes had been signed.”
Read the full decision here. &
