Introduction
Insurance claims can quickly become complex when more than one cause of loss occurs at the same time or in any sequence, damaging the same property. This concept, known as concurrent causation, is especially prevalent during natural disasters like hurricanes, where both wind and flood act together to cause destruction. These situations present significant challenges for claim investigations, which become even more complicated when insurance policies include anti-concurrent causation clauses, as is standard in many Florida homeowner’s policies regarding flood exclusions.
What Is Concurrent Causation?
Concurrent causation arises when two or more perils, which may or may not be covered under an insurance policy, contribute to a single loss. These perils can act simultaneously or in any order. For example, during a hurricane, wind and flood may both damage a property. When insurance companies assess claims, determining which damage resulted from which peril is critical, especially since policy language often excludes certain types of damage—most notably, flooding.
The Role of Anti-Concurrent Causation Clauses
The standard Florida homeowner’s insurance policies contain anti-concurrent causation (ACC) clauses for flooding. These provisions state that if an excluded peril (such as flooding) contributes to a loss—regardless of whether another covered peril is also involved—coverage may be denied for the entire loss.
Legal Insight: Dalmac Realty LLC v. Scottsdale Insurance Company
A recent case in the United States District Court for the District of Connecticut—Dalmac Realty LLC v. Scottsdale Insurance Company—illustrates how anti-concurrent causation clauses are interpreted and enforced. In this case, a pipe burst under an apartment building, flooding the ground beneath the property. The resulting earth settling caused the main floor joist to collapse, leading to the property being condemned. Scottsdale Insurance denied the claim, citing the policy’s earth movement and settling exclusion, which included ACC language. The court sided with the insurer, emphasizing that the exclusion applied “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Even though the broken pipe was the primary cause, the ACC clause barred coverage for the earth movement and settling damages.
Challenges in Post-Hurricane Claim Investigations
In the aftermath of hurricanes, insurance carriers and policyholders must collaborate to distinguish wind damage from flood damage. Sometimes, this can be done during the initial inspection, especially if there is a clear line between rainwater and floodwater damage. However, it is often necessary to engage forensic engineers to analyze and separate the damages, which can be a highly technical and time-consuming process.
When the damages can be separated, insurance carriers may apply the policy and pay for the wind-damaged items. However, the presence of ACC language related to flood exclusions can still affect coverage. For example, if floodwaters create a breach in the home’s structure—such as carrying a boat into the building and breaking a wall or roof—rainwater may subsequently enter and damage areas untouched by the flood. Even if wind-driven rain is generally a covered peril, the ACC exclusion may bar coverage for those ensuing damages because the initial entry point would not exist without the flood.
Exceptions to the Flood Exclusion
There is a notable exception to the flood exclusion in many policies: if a flood causes a fire or explosion, any resulting damage from the fire or explosion is typically covered. Although this scenario is uncommon, it can occur, for instance, if lithium-ion batteries in flooded electric vehicles ignite or if electrical systems damaged by saltwater cause fires once power is restored.
Conclusion
Concurrent causation and the application of anti-concurrent causation clauses remain complex and often contentious areas in insurance law. Both insurers and policyholders must be diligent in investigating and documenting the specific causes of property damage, particularly following catastrophic events like hurricanes. Understanding the implications of policy language and recent legal decisions is essential for navigating the claims process and ensuring that coverage determinations are both fair and accurate.
