It’s important to note that the specific coverage and exclusions wereunder LEG1, LEG2, and LEG3 clauses can vary between insurance policies and insurers. It’s always recommended to carefully review the actual policy wording to understand the precise coverage and exclusions provided by the insurance policy in question.
What is London Engineering Group (LEG) Exclusion clause?
It is a consultative body for insurers of engineering class risks providing a forum for discussion and education.
LEG 1/96
Wording:
The insurer shall not be liable for Loss or Damage due to defects of material workmanship design plan or specification
Explaination:
Coverage: LEG1 typically provides coverage for “all risks” associated with the construction project, including damage to the works, materials, and equipment. It may also cover third-party liability arising from the project.
Exclusions: Exclusions may vary depending on the policy, but common exclusions under LEG1 could include wear and tear, faulty design, and acts of terrorism.
Construction Example: Let’s say a construction project involves building a new office tower. LEG1 insurance would cover accidental damage to the building during construction, such as damage caused by a fire, storm, or collapse of scaffolding. It would also cover any liability claims arising from third parties who may be injured on the construction site.
LEG 2/96
Wording:
The Insurer(s) shall not be liable for All costs rendered necessary by defects of material workmanship design plan specification and should damage occur to any portion of the Insured Property containing any of the said defects the cost of replacement or rectification which is hereby excluded is that cost which would have been incurred if replacement or rectification of the Insured Property had been put in hand immediately prior
to the said damage.
For the purpose of this policy and not merely this exclusion it is understood and agreed that any portion of the Insured Property shall
not be regarded as damaged solely by virtue of the existence of any defect of material workmanship design plan or specification
Explaination:
Coverage: LEG2 typically provides coverage for damage caused by specified perils or risks, which are listed in the policy. These perils may include fire, lightning, explosion, flood, and other named events.
Exclusions: Exclusions under LEG2 may vary, but they typically exclude damage caused by perils not listed in the policy. For example, if earthquake coverage is not specified, damage caused by an earthquake would be excluded.
Construction Example: Suppose a construction project is located in an area prone to flooding. LEG2 insurance would cover damage caused by a flood during the construction process if flood coverage is included in the policy. However, damage caused by a different peril not listed in the policy, such as an earthquake, would not be covered.
LEG 3/96
Wording:
The Insurer(s) shall not be liable for All costs rendered necessary by defects of material workmanship design plan specification and should damage occur to any portion of the Insured Property containing any of the said defects the cost of replacement or rectification which is hereby excluded is that cost incurred to improve the original material workmanship design plan or specification For the purpose of this policy and not merely this exclusion it is understood and agreed that any portion of the Insured Property shall not be regarded as damaged solely by virtue of the existence of any defect of material workmanship design plan or specification.
Explaination:
Coverage: LEG3 is typically a narrower form of coverage compared to LEG1 and LEG2. It provides coverage for specific named perils or risks that are listed in the policy. These perils are typically limited to significant risks, such as fire, explosion, and collapse.
Exclusions: Exclusions under LEG3 may vary, but they typically exclude damage caused by perils not listed in the policy. Additionally, certain risks, such as faulty design or wear and tear, may be excluded.
Construction Example: Let’s consider a construction project involving the renovation of an existing bridge. LEG3 insurance might cover damage caused by a fire or explosion during the renovation process, as those named perils are included in the policy. However, damage resulting from a collapse of the bridge due to poor workmanship or design would likely be excluded.