“Owned Property” Exclusion Bars Coverage for Costs to Stabilize and Then Demolish Damaged Building, Circuit Court Rules

The U.S. Court of Appeals for the Eighth Circuit has affirmed a district court’s decision that a building owner’s expenses in seeking to stabilize and then to demolish a building damaged in a windstorm were not covered under its commercial general liability insurance policy.  

The Case 

Several years ago, Clarinet, LLC, purchased a building in St. Louis, Missouri, that it intended to renovate into luxury condominiums and commercial space. A windstorm damaged the building, destroying parts of two exterior walls and part of the roof. Clarinet attempted to stabilize the building, but ultimately the building had to be demolished.  

After the demolition, Clarinet asked its insurer, Essex Insurance Company, to pay its expenses for stabilizing and demolishing the building. Essex denied coverage and Clarinet sued. 

The district court granted judgment in favor of Essex, and Clarinet appealed. 

The Circuit Court’s Decision 

In its decision, the circuit court rejectedClarinet’s argument that Essex had to cover the expenses it had incurred in stabilizing and ultimately demolishing the building because those expenses were necessary to prevent injury to people and property.  The circuit court found that coverage of those expenses was barred by the policy’s “owned property” exclusion, which provided that the policy did not cover damage to Clarinet’s property, “including any costs or expenses incurred . . . for repair, replacement, . . . or maintenance of such property for any reason, including prevention of injury to a person or damage to another’s property.” (Emphasis added.)  Accordingly, the circuit court affirmed the district court’s decision in favor of Essex. 

The case is Clarinet, LLC v. Essex Insurance Co., No. 12-1416 (8th Cir. Apr. 22, 2013).