Concurrent Causation and Anti-Concurrent Causation
Many Propertry Policies Exclude Concurrent Causation
Concurrent causation is a legal doctrine relevant to property insurance. The doctrine may apply when property has been damaged by two or more causes, some of which are excluded. When the doctrine is applicable, the insurer must pay the entire loss if at least one of the causes is covered by the policy.
How Concurrent Causation Applies
Concurrent causation may apply when two or more events have contributed to a loss and one of them is an insured peril. The events may occur simultaneously or one after the other.
For example, suppose a commercial building is damaged by both wind and flooding from heavy rain. The building is insured under a standard commercial property policy. The loss is the result of two causes: wind (a covered peril) and flooding (an excluded peril). If the concurrent causation doctrine applies to the loss, the insurer must pay for all of the damage. Because wind is a covered peril, the damage caused by flooding is covered as well. The insurer must pay the entire loss whether one peril preceded the other or both occurred at the same time.
The concept of concurrent causation originated in California in the 1980s. Courts relied on this concept in several key rulings that forced insurers to pay property losses caused by perils such as landslide and flood that were excluded by their policies. Insurers responded to the rulings by adding anti-concurrent causation language to their policies.
Anti-Concurrent Causation Wording
An anti-concurrent causation clause is intended to eliminate coverage for any loss that's partially caused by an excluded peril. The clause is normally located in the exclusions section of a property policy. In the standard ISO policy, the exclusions are outlined in a Causes of Loss form. The Special (all-risk) Causes of Loss form contains four groups of exclusions. The anti-concurrent causation language applies to the first group, which exclude following eight perils:
- Ordinance or Law
- Earth Movement
- Government Action
- Nuclear Hazard
- Utility Services
- War and Military Action
- Water (Flood)
- Fungus (Mold)
The clause states that the insurer will not pay for any loss or damage caused directly or indirectly by any of these eight perils. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. In other words, loss caused by any of the eight perils is excluded even if the peril occurs before, after, or in conjunction with a covered peril.
The anti-concurrent causation clause generally applies to the types of perils that can cause catastrophic losses. Examples are flood and earthquake.
The anti-concurrent causation clause applies only to the eight perils cited above. It does not apply to other excluded perils such as boiler explosion, electrical damage, and mechanical breakdown. If a loss is caused by a combination of say, boiler explosion (an excluded peril) and wind (a covered peril), the damage caused by the wind should be covered. The boiler exclusion won't affect coverage for wind because the exclusion isn't subject to the anti-concurrent causation clause.
Clause May Not Be Enforced
The fact that a policy contains anti-concurrent causation wording doesn't guarantee the clause will be enforced. Because many losses result from multiple causes, states have rules in place to determine what portion of a loss is covered. A few states bar anti-concurrent causation clauses if they conflict with the state-established principle. Other states allow the clause to supersede the doctrine the state normally follows.
Rules To Determine Cause of Loss
Courts generally use one of three approaches to determine the cause of a loss. One is the doctrine of concurrent causation outlined above. Only a few states follow this doctrine.
A second approach is called the efficient proximate cause rule. The efficient proximate cause is the predominant cause, the one that initiated the chain of causes. When the efficient proximate cause rule applies, a loss will be covered if its predominant cause is a covered peril. For example, a windstorm causes a tree to fall on a building. The efficient cause of the loss is the windstorm. Wind is a covered peril so the loss will be covered. However, if the tree falls during an earthquake, the predominant cause of the loss is the earthquake. Because earthquake is an excluded peril, the loss won't be covered.
The third approach used to determine the cause of a loss is apportionment. States that use this approach try to determine what portion of the loss resulted from covered perils and what part resulted from excluded perils. Only the portion of the loss caused by insured perils will be covered.