In a significant ruling, the Eighth Circuit Court of Appeals determined that Travelers Insurance is not liable for loss of rental income and soft costs claimed by BCC Partners, LLC in relation to construction delays at a luxury apartment project in Creve Coeur, Missouri.
Background of the Insurance Dispute
In 2015, BCC Partners entered into an agreement with Ben F. Blanton Construction, Inc. to build a high-end apartment complex. As part of the contract, Blanton was required to carry insurance, which was obtained through Travelers. While Blanton was listed as the “Named Insured”, BCC was included as an “Additional Named Insured.”
After six months of work, a retaining wall collapsed, leading to extensive delays and damage. Both Blanton and BCC submitted claims. Travelers responded by depositing $1.3 million into an escrow account, which was divided between the parties.
Claim for Additional Coverage Denied
In 2016, BCC submitted another claim seeking coverage for lost rental income and soft costs tied to the delay. Travelers initially paid $200,000 as an advance. Over the next two years, BCC provided supporting documentation.
However, in 2019, after completing its investigation, Travelers denied the remaining claim and reserved the right to recover the earlier payment.
By 2022, BCC demanded full coverage up to the policy limits of $1.4 million. When Travelers declined, BCC sued for breach of contract. A district court sided with Travelers, ruling that BCC was not entitled to the benefits under the policy’s language.
Appeals Court Affirms Lower Court’s Decision
The Eighth Circuit upheld the lower court’s judgment. The panel determined that the policy only extends coverage for rental losses and soft costs to the “Named Insured”, not to any “Additional Named Insured.”
BCC’s argument that the term implied equal coverage rights was rejected. The court emphasized that under Missouri law, insurance contracts must be interpreted based on clear and unambiguous language.
Judge Raymond Gruender, writing for the panel, acknowledged that there may have been expectations of broader coverage, but the actual policy language took precedence.
“Even if BCC or Travelers believed coverage existed, the policy must be enforced as written,” Gruender noted.
This ruling highlights the importance of understanding the specific definitions and limitations outlined in commercial insurance policies. For real estate developers, it serves as a cautionary tale: unless explicitly stated, being listed as an “Additional Named Insured” does not guarantee entitlement to certain financial protections, such as rental income loss or delay-related costs. The decision reinforces that policy wording prevails over assumed intentions or expectations.