Insurance Shake-Up: Eighth Circuit Upholds Limitations on Policy Coverage for "Additional Named Insured" Parties

On June 9, 2025, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Missouri, holding that “Additional Named Insured[s]” under an insurance policy were not covered for lost rental income, and “soft costs” (indirect expenses not directly related to the physical construction process).

BCC Partners, LLC contracted with Ben F. Blanton Construction, Inc. to build an apartment complex in Creve Coeur, Missouri. The contract required the general contractor to obtain insurance. Blanton subsequently purchased an insurance policy. The policy listed Blanton as the “Named Insured” and BCC as an “Additional Named Insured.”

In the ensuing months, a key retaining wall failed during construction causing damage and delay to the project. Multiple insurance claims were filed with the insurer, which paid $1.3 million out to an escrow account and was divided between the recipients. The following year, BCC filed another claim with the insurer under the same original policy for damages of alleged loss of rental income and “soft costs” resulting from the failed retaining wall and claimed to be covered as an “Additional Named Insured” in the policy. The insurer investigated the claim and denied BCC coverage as an “Additional Named Insured” and reserved the right to recover the initial advancement.

BCC sued the insurer for breach of contract and vexatious refusal to pay under Missouri law. Both parties filed summary judgment motions. The district court found in favor of the insurer on both claims, stating that as a matter of law, BCC was not entitled to the payments under the terms of the policy. BCC timely appealed.

On appeal the court addressed the breach of contract claim. The policy stated that coverage extends to “the actual loss of rental value ‘you’ sustain” and “‘your’ soft costs” that result from certain construction delay. The court ruled that although BCC argued that the terms “you” and “your” applied to “Additional Named Insured,” under the Common Policy Declaration of the policy those terms only refer to “Named Insured” which was Blanton, not BCC.

BCC argued that the language of the policy was ambiguous and that under Missouri law, “If language in an insurance policy is ambiguous, the court resolves the ambiguity against the insurer-drafter.” The court rejected this argument, holding that the plain language of the policy did not conform to BCC’s preferred reading, nor was it ambiguous. The court pointed out that under BCC’s interpretation of the policy, there would be no difference between “Named Insured” and “Additional Named Insured”— an interpretation it deemed implausible.

According to the court of appeals, under the clear and unambiguous policy language, BCC was an “Additional Named Insured,” which is distinct from a “Named Insured.” An “Additional Named Insured” is not covered for lost rental value and soft costs. Accordingly, the policy did not cover BCC for rental income lost and soft costs incurred following the construction delays at the Vue Project. Thus, the insurer did not breach the policy by declining to make the $1.4 million payment to BCC.

Practical Considerations: