Travelers v. Larimer County and the Concept of Covered Cause of Loss

Travelers Indemnity Company (“Travelers”) recently won a decision against Larimer County regarding a claim for damage caused to the roofs of several buildings at the County Fairgrounds.  Travelers Indemnity Company v. Board of County Commissioners for Larimer County, Slip Copy, 2013 WL 238865, p. 1 (10^thCir. 2013).  Larimer County alleged, in district court, that snowstorms and the weight of the snow build-up caused damage to the roof structures.  Id.  After the district court found for Travelers on a motion for summary judgment, Larimer County appealed the ruling, claiming that Traveler’s was obligated under the insurance policy to pay for repair costs to portions of the roofing structure.  Id.

The underlying claim for repairs originates with several snowstorms that caused damage to several buildings on the County Fairgrounds.  The damage claimed was widespread to the roof structures, evidenced by rolling and buckling purlins (horizontal beams running along the length of the roof, resting upon the principal rafters at right angles and supporting the ordinary rafters).  Travelers denied the claim based on its own investigation which concluded the damage was caused by design and construction defects, and therefore excluded from coverage under the insurance policy.

The relevant language of Larimer County’s insurance policy with Travelers (the “Policy”) states that Travelers will “pay for direct physical loss or damage” to the property if that damage is “caused by or resulting from a Covered Cause of Loss.”  Id.  Covered Loss is defined in the Policy as “risks of direct physical loss unless that loss is excluded” by other provisions in the Policy.  Id.  The language of the defective construction exclusion states, “in the event that an excluded cause of loss . . . results in a Covered Cause of Loss, [Travelers] will be liable only for such resulting loss or damage.”  Id. 

The Court focused on the specific language providing that where “an excluded clause of loss -here, defective construction- “results in a Covered Cause of Loss,” any resulting loss is covered.  Id. at 2.  Essentially, even though a construction defect is not covered by the Policy, if that defect causes (or results in) a Covered Cause of Loss, and then that Covered Cause results in property damage, the resulting property loss is covered.  Id.  In effect, the exception provides for coverage only when the excluded cause becomes a new causal agent that itself causes resultant damage.  Id. 

In relation to the facts of the case, the Court found that while the defective condition of the roof may have acted as a causal agent to damage the purlins, the purlins themselves are not a Covered Cause of Loss resulting in additional damage.  Id.  Larimer County was only claiming a loss for the damage to the purlins, not that the damage to the purlins caused some other loss or property damage.  Id. 

The Court stated that the claimed damage was the displacement of the purlins and the unambiguous language of the exclusion precludes coverage.  The Court agreed with the district trial court and affirmed the summary judgment.