With all of the claims arising from Hurricane Sandy, the issue of what damage is covered under an insurance policy is extremely important to most people. As with most hurricanes, the question becomes what damage was caused by flood and what damage was caused by wind. How does New Jersey law deal with multiple causes of loss when one of the causes of loss is excluded under the policy?

With regards to concurrent causes of loss, it is up to a jury to decide which cause of loss caused the claimed damage. “Moreover, even where included and excluded causes occur concurrently, it is for the fact finder to determine which part of the damage was due to the included cause of loss and for which the insured can recover.”1 Thus, with Hurricane Sandy, New Jersey juries will decide what damage was caused by flood and what was caused by wind.

But not all losses occur at the same time; often, there is a sequence of events that lead to damage. In some instances, there will be a windstorm, followed by a flood, followed by a fire. How does the law treat such losses when only one cause of loss is covered? New Jersey follows Appleman’s Rule with regard to sequential causes of loss. “[W]ith regard to sequential causes of loss, our courts have determined that an insured deserves coverage where the included cause of loss is either the first or last step in the chain of causation which leads to the loss.”2 Appleman’s Rule specifically states that “recovery may be allowed where the insured risk was the last step in the chain of causation set in motion by an uninsured peril, or [w]here the insured risk itself set into operation a chain of causation in which the last step may have been an excepted risk.”3 Accordingly, if you have coverage for wind damage, and damage from wind causes a flood, you would likely have coverage for all of the damage.

The above applies in the absence of any policy language dictating coverage. Many policies have provisions denying coverage where an excluded cause of loss occurs in concurrence with a covered cause of loss. In my next post, I will discuss how New Jersey Courts interpret such policy provisions.

1 Brindley v. Firemen’s Ins. Co. of Newark, N.J., 35 N.J. Super. 1, 6, (App. Div.1955).
2 Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, (App. Div. 2004).
3 5 Appleman, Insurance Law and Practice § 3083 at 309-311 (1970).

  • Robby Robinson

    In my 9 years as an IA, the lion’s share of my experience lies within litigated and PA rep’d claims

    During hurricane Katrina, on the first go around, with regard to water lines at 7 feet and above so many claims were either denied outright or limited to replacing the roof.
    Once these claims were reopened, I found many examples of roofs damaged to the extent that it was clear significant interior damage occurred prior to the onset of flood waters. Aside from areas right along the Industrial Canal, Katrin’s flood waters rose much like a bathtub as opposed to a massive wave of water destroying everything in it’s path (ala’ Katrina’s storm surge into Waveland Biloxi and Bay St.Louis, Mississippi)
    There were multiple examples of coverage all the way down to the floors on risks that had 8 10 even 12 ft of water. The problem was most adjusters are worried about the quantity of claims as opposed to the quality of said claims

  • Chip Merlin


    I found that a lot of reopened claims proved to have wind damage as well in Katrina. I think anytime that people spend more time analyzing a loss, a better picture of what happened is found.

    With the competitive profit nature of the insurance industry, many insurance companies simply do a quick invetigation and deny or underpay these types of losses. It is not right, but it explains what you and I have seen in the field.