United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 04-1774

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Assurance Company of America, *

*

Plaintiff - Appellee, * Appeal from the United States

* District Court for the

v. * Eastern District of Missouri.

*

Adbar, L.C., * [UNPUBLISHED]

*

Defendant - Appellant. *

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Submitted: January 14, 2005

Filed: April 29, 2005

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Before LOKEN, Chief Judge, HANSEN and MORRIS SHEPPARD ARNOLD,

Circuit Judges.

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PER CURIAM.

The Missouri “valued policy” statute provides that an insurer of property

damaged by fire “shall not be permitted to deny that the property insured thereby was

worth at the time of the issuing of the policy the full amount insured.” MO. ANN.

STAT. § 379.140. A “builders risk” policy is a common form of fire insurance for

buildings under construction in which the policy declares the completed value of the

building but the insured pays a reduced premium in exchange for lesser amounts of

coverage prior to completion. It is settled that the Missouri courts do not construe

§ 379.140 as requiring a builders risk insurer to pay the declared completed value if
1

The HONORABLE CHARLES A. SHAW, United States District Judge for

the Eastern District of Missouri.

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the policy obligates the insurer to pay only a lesser amount for a fire loss that occurs

prior to completion. See American Family Mut. Ins. Co. v. Doug Rose, Inc., 841

S.W. 2d 698, 700 (Mo. App. 1992). 

In this case Adbar, L.C., purchased a building for $40,000 intending to replace

or renovate it. Assurance Company of America issued Adbar a commercial fire

policy insuring the building. The policy’s declarations listed the coverage for any one

structure as $450,000, subject to the policy’s Builders Risk Coverage Form. The

building was damaged by fire before Adbar began improvements. Assurance

commenced this diversity action to resolve a coverage dispute. Adbar contends it is

entitled to recover $450,000, the declared value of the building, under § 379.140, the

valued policy statute. Assurance contends that the builders risk provisions limit

Adbar’s covered loss to $40,000, the purchase price of the unimproved building. The

district court1

 concluded that the policy “falls within the builders risk exception to the

valued policy statute” and entered judgment decreeing that Assurance is liable to

Adbar for the purchase price, $40,000. Adbar appeals. We affirm. 

Adbar argues that the policy “does not contain the disclosures necessary to

trigger the builders risk exception.” We reject this contention as contrary to the plain

language of the policy. The declarations page states that the Builders Risk Coverage

Form is “Applicable To All Parts” of the policy. The certificate of insurance issued

to Adbar’s mortgage lender states that $450,000 is the “Amount of Coverage Per

Building (Completed Value).” An endorsement to Section E, Paragraph 6 of the

Builders Risk Coverage Form provides:

The most we will pay for any loss to the existing building(s) or

structure(s) will be:
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1. The amount you actually spend to repair the damaged or

destroyed property . . .;

2. Actual cash value . . . as of the time of loss; 

3. The amount you paid for the existing building(s) . . . plus the

replacement cost of the improvements made by you . . .;

4. The reported value for that location

whichever is less.

(Emphasis added.) Adbar argues that this provision appears in the “valuation” part

of the policy and does not effectively qualify the $450,000 limit of liability that

defined Adbar’s insurable interest in the property. But no Missouri case has held that

the builders risk coverage limitations must appear in any particular provision of the

policy or be reflected in any particular policy language. On the undisputed facts

presented to the district court, the above-quoted provision plainly limited Assurance’s

liability for this loss to the amount Adbar paid for the property, $40,000.

For these reasons and the reasons stated by the district court in its

Memorandum and Order dated February 24, 2004, the judgment of the district court

is affirmed.

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