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Does Your Builders’ Risk Coverage Have a LEG to Stand On?

Denise Pfister
Denise Pfister
Vice President, Construction

When purchasing Builders’ Risk coverage, you might hear the term “LEG.” Not to be confused with wine legs (which are slightly more enjoyable to discuss), LEG can be an important indicator for the standard of construction insurance coverage you will receive from different carriers.

What Is LEG and Why Does It Matter?

London Engineering Group, also known as LEG, is a consultative body for insurers providing a forum for discussion and education. LEG has a standard set of coverage that many carriers follow; however, each insurance carrier may have their own nuances. As you research potential carriers and coverage, it can be helpful to familiarize yourself with LEG standards and endorsements to ensure the selected coverage meets the needs of your project.

When you’re required to buy Builders’ Risk coverage for a construction project, you may see a requirement for faulty workmanship coverage or a reference to LEG. There are three different LEG endorsements, also known as LEG defect clauses.

  • LEG I is an outright broad exclusion for loss or damage due to defects of material workmanship design plan or specification.
  • LEG 2, referred to as the compromise solution, excludes only rectification costs for preventing damage.
  • LEG 3 is the broadest coverage by limiting the exclusion to costs incurred to improve or upgrade the original materials, workmanship, design, plan, or specification.

Choosing the Right Insurance Coverage

The LEG defect clauses are well established and widely used by insurance carriers. While we see our carriers often including LEG 2 within the coverage form, there is no standard Builders’ Risk policy or contract requirements. With the goal being to return your business to the position you were in prior to a loss, it’s important to work with a broker like Holmes Murphy to carefully consider which defect clause is most appropriate for your project.

Do you need help understanding and selecting Builders’ Risk coverage? Our Holmes Murphy Construction team is ready to help! Contact us to start a conversation today.

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