Efficient Proximate Cause: There May Be Coverage For An Excluded Cause of Loss

Recently, a small restaurant was vandalized. The damage caused by the vandals caused a water leak, which damaged the restaurant’s top floor bathroom and the bottom floor of the property. The damage was extensive, and the restaurant retained a water remediation company that same day.

The restaurant’s owner retained a public adjuster who he used in the past, and the claim was presented to the carrier. The carrier immediately changed the focus of the claim from the covered peril of vandalism to the excluded peril of water damage. The insurer denied coverage based on the insurance policy’s water loss exclusion.

This case presents a chain of events issue, which is often referred to as the efficient or predominate cause fact pattern. The first step in analyzing coverage in such a case is to determine whether the initial cause is covered under the insurance policy. Here, the insurance policy provided coverage for vandalism. The insurance policy did define “vandalism,” so the common ordinary dictionary meaning of the word is used. According to Webster's Collegiate Dictionary, 10th ed., vandalism is “the willful or malicious destruction or defacement of public or private property.” Black's Law Dictionary defines vandalism as “such willful or malicious acts as are intended to damage or destroy property.”

Because the vandals intentionally defaced the property, which led to the water damage, the initial damage is covered. Unfortunately, the majority of the damage was caused by the ensuing water leak, which is an excluded cause of loss under the insurance policy.

But coverage likely exists under the efficient proximate cause doctrine. The efficient proximate cause doctrine is rooted in the Latin maxim causa proxima, non remota spectator. This maxim has been widely interpreted to mean, “the immediate not the remote cause is considered.”1

One of the leading and often quoted cases on the doctrine of proximate cause is Insurance Company v. Boon.2 In Boon, the policy covered certain goods in a store building. It contained a provision exempting the insurer from liability for “loss or damage by fire which may happen or take place by means of any invasion, insurrection, riot or civil commotion, or of any military or usurped power.” In October, 1864, Rebel forces surrounded and attacked the city, which was defended by Union forces. During the battle, Union officials set fire to the City Hall to prevent it from falling into the hands of the enemy. The fire spread to the building adjacent to the City Hall and from building to building through two intermediate buildings, reaching the store and destroying the insured goods. The U.S. Supreme Court held “that the fire which destroyed the plaintiff's property took place by means of an invasion or military or usurped power, and that it was excepted from the risk undertaken by the insurers.” In discussing the principle of proximate cause, the Court stated,

The proximate cause is the efficient cause, the one that necessarily sets the other causes in operation. The causes that are merely incidental or instruments of a superior or controlling agency are not the proximate causes and the responsible ones, though they may be nearer in time to the result.

Vandalism is the “but for” or cause that set the restaurant’s loss in motion, so the resulting water damage, should be covered.

Next week, I will post about the opposite scenario, in which an excluded peril leads to damage caused by a covered peril. It may be difficult to handle the suspense, but check back next week. I will explain why there may or may not be coverage under these circumstances.


1 Tillery v. Hull & Co., Inc., 876 F.2d 1517, 1519 (11th Cir. 1989).
2 Insurance Co. v. Boon, 95 U.S. 117, (U.S. 1877).

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Comments (4) Read through and enter the discussion with the form at the end
Eugene H. Twarowski, III - February 28, 2013 6:44 PM

Good article, typical unreasonable conduct by the carriers.

ANONYMOUS - February 28, 2013 8:27 PM

The carrier considers its own interest in evaluating and denying coverage, and unless the insured is knowledgable or retains a professional, avoids paying.

Insurance Veteran - February 28, 2013 9:54 PM

If the vandalism caused the leak and subsequent damage then carrier is out to lunch on this. With inefficient training and licensing requirements mistakes like this are all too common place. As adjusters we are often faced with instructions from carriers that make no sense. With the number of veteran claims people retiring it's becoming more obvious that the talent pool is indeed shallow.

Cynthia Mcardle - March 25, 2013 3:45 AM

Great post! This is so informative. I learned much from this. Thanks for sharing!

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