Village Homes of Colorado Inc. won a legal victory against its insurance company Thursday.

The Colorado Court of Appeals sided with the home builder in a 2-1 ruling over whether the insurer must pay for construction defects. The appellate court affirmed the judgment of the lower court.

The appeal was filed by Travelers Casualty and Surety Co. and Travelers Casualty Co. of Connecticut. The decision announced Thursday requires Travelers to pay $200,000 to cover damages to the homes under the builder's insurance policy.

Travelers wrote a general liability and an umbrella policy for Village Homes that covered the period from Aug. 1, 1995, to Aug. 1, 1996. Three homeowners from Jefferson County sued Village Homes in 2000, claiming the builder was liable for construction defects because of expansive soils. A fourth homeowner sued in 2001.

Village Homes turned the case over to Travelers, which denied coverage. The builder sued, arguing the insurer was obligated to cover part of the damages paid out to the homeowners under the policy.

Travelers argued in its appeal the damage wasn't covered because the homeowners bought the houses after the coverage date of the insurance policy expired. Travelers also argued no coverage existed because the homeowners didn't suffer any harm during the policy period.

Three of the homeowners bought their houses in 1997 from prior owners. The fourth bought the home in 1999.

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The Denver Business Journal

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