"Ensuing loss" provisions are the "Lazarus" clauses in property insurance policies. Property damage claims otherwise excluded from coverage, are raised from the dead and paid as a result of them. They are difficult to understand and the court decisions seem inconsistent. However, when there seems to be an event that is excluded, many times a water damage event, these clauses are often the only means of recovery.
What is an "ensuing loss" clause and where are they found? The following wording is typical of an ensuing loss clause which is typically found at the end of exclusions:
* "…any ensuing loss to property described in Coverages A and B not precluded by any other provision in this policy is covered."
* "Under exclusions …., any loss that follows is covered unless it is specifically excluded."
These ensuing loss clauses act as exceptions to exclusions. As a matter of practice, all insurance adjusters and those analyzing coverage following loss, should carefully consider how a loss occurred and contemplate how an ensuing loss clause may provide coverage to the policyholder for a loss that at first glance, may appear excluded.
Butler Pappas attorney, Bill Lewis wrote an excellent article, "What The Heck is an Ensuing Loss?". Butler Pappas represents property insurers.
Bill Lewis is a frequent, and able, adversary to our firm. My only caveat of the paper is that it is slightly slanted towards construction that limits coverage–but that should be expected of an advocate for the insurance company. Otherwise, I strongly encourage my fellow "coverage nerds" to read this article regarding a very important aspect of property insurance coverage analysis.