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No Renovation Equates to No Payment Due by Insurer
In Park Reserve, LLC vs. Peerless Insurance Company, Peerless filed a motion for partial summary judgment arguing that a builder’s risk insurance policy issued to plaintiff did not provide coverage based on its clear and unambiguous terms.
Peerless issued a builder’s risk policy to plaintiff for five buildings.  The policy contained an endorsement providing that Peerless would cover direct physical loss to the buildings “while in the course of rehabilitation or renovation including additions, alterations, improvements or repairs.”  The plaintiff insured never rehabilitated or renovated the subject buildings during the applicable policy period or thereafter.  Nevertheless, the insured submitted a claim, requesting coverage.
The U.S. District Court for the Western District of Missouri found that the phrase “in the course of rehabilitation or renovation” is unambiguous.  It was undisputed that the plaintiff never rehabilitated or renovated the subject buildings during the policy period. 
Plaintiff argued that the above-quoted phrase was undefined and ambiguous and that the phrase covers buildings purchased for the purpose of construction in which work had not yet begun.  The court dismissed this argument finding that under that interpretation, a building could lay vacant indefinitely and still fall within the ambit of insurance coverage when work has not commenced.  Plaintiff also argued that the buildings were in the course of rehabilitation and renovation because they were part of a multi-building construction project. 

However, other buildings in the project that were not covered under this policy had no bearing on the lack of any work being done on the insured five buildings.  Plaintiff also maintained that Peerless should be estopped from asserting the “in the course of rehabilitation and renovation” provision, since Peerless was unaware that plaintiff had not begun construction on the subject properties and yet kept the policies in place.  No authority was cited by the insured for that position and the court determined that defendant’s knowledge, one way or the other, does not affect the unambiguous and enforceable terms of the policy. 

Finally, plaintiff claimed that defendant should be estopped from asserting the policy provision because it never inspected the subject buildings.  Again, no legal authority was cited for that argument.  While the policy did give Peerless the right to inspect, such right did not translate into an obligation to inspect plaintiff’s property.
The court granted the motion of Peerless Insurance for partial summary judgment.

If you have any questions regarding this case or any other insurance law issues, please contact one of our Insurance Law attorneys at 816.931.2700.
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Kent M. Bevan

Copyright © 2016 Dysart Taylor Cotter McMonigle & Montemore, P.C., All rights reserved.

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