A little more than a year has passed since Goodman Law Group | Chicago secured a major victory for policyholders in the construction industry in South Capitol Bridgebuilders v. Lexington Insurance Company (SCB). In SCB, a federal court in Washington, DC, issued the first reported decision concerning the meaning of the so-called LEG3 endorsement (a type of “Cost of Making Good” endorsement), finding that it provides coverage for the costs incurred to repair damage to construction projects resulting from a contractor’s design, workmanship, or faulty materials.
Prior to the SCB decision, insurers collected millions upon millions of dollars in insurance premiums to cover the risk of damage resulting from defective design, workmanship, or materials. These same insurers aggressively resisted paying such claims by seeking refuge in the murky language used in the builders risk policies they drafted. Our client, South Capitol Bridgebuilders, was left to foot the multimillion-dollar bill to repair the construction defects that were at the center of the SCB dispute until Goodman Law Group | Chicago stepped in and recovered those repair costs from the insurer.
SCB highlighted the risk to policyholders presented by ambiguities such as the tortured LEG3 endorsement language that was the center of this insurance coverage dispute. The SCB decision has garnered international interest, with numerous articles written about our case, and has inspired ongoing debate within the insurance industry. In a subsequent federal case addressing similar issues related to a bridge and roadway construction project, a Florida judge relied on SCB to find that the expense to repair defective concrete was covered by the “Cost of Making Good” endorsement of a builders risk policy issued by a different insurer.
Even so, the fundamental issue highlighted in SCB—the ambiguous language used by the insurer—is still commonly used in many builders risk policies (for which policyholders are paying substantial premiums). Addressing ambiguities in insurance policies is at the core of our work at Goodman Law Group | Chicago. For example, we successfully secured insurance coverage this past year for multiple manufacturers in precedent-setting litigation involving Illinois’ Biometric Information Privacy Act (BIPA).
Business insurance policies are frequently drafted in a way that may mask coverage. The recoveries we secured in SCB and in the recent BIPA coverage cases rested on murky policy language that even confounded the brokers who sold the policies.
The takeaway? When insurers gladly collect substantial premiums to “assume” the risks associated with a business’ operations and then deny coverage, it pays to consult experienced insurance coverage counsel, such as Goodman Law Group | Chicago.
