Wordings Library
Construction
Clause explained
LEG / DE Defects Clauses
Construction defects clauses allocate how much of the cost of defective design, material, or workmanship is excluded versus resulting damage.
Meaning
Construction defects clauses allocate how much of the cost of defective design, material, or workmanship is excluded versus resulting damage.
Why insurers use it
To establish a deliberate coverage boundary for rectification and consequential project damage.
Effect on coverage
Different versions can range from broad exclusion to limited cover for damaged defective property, often with improvement costs excluded.
Illustrative example
A defective weld fails during testing and damages nearby equipment.
Claim consequence
The clause can determine whether only the weld, a wider component, or resulting damage is recoverable.
What the insured should negotiate or check
Check exact LEG/DE version, damaged versus defective property, access costs, betterment, testing, and maintenance period.