Peter N. Swisher, a Law Professor at University of Richmond Law School, wrote an article recently published in the Tulane Law Review, with a title containing the question every insurance customer suffering from claim denial asks: "Why Won’t My Homeowners Insurance Cover My Loss?": Reassessing Property Insurance Concurrent Causation Coverage Disputes.1
It reminds me of an article which is one of the most read posts I have ever written, Is The State Farm Policy Really Worth Anything? From the consumer’s standpoint, they are surprised that their insurance carrier would ever have this clause—after all, do any insurers advertise this clause when trying to sell their product? From the advertising insurance company, it is truly bait the consumer into purchase and switch with small and nonsensical small print language.
Professor Swisher noted the following:
"The danger with the anticoncurrent causation clause is that it could in theory tempt an insurer to take it to an unreasonable extreme, which in turn could cause a court to overreact and construe the clause too narrowly, creating an undesirable precedent."2
From my viewpoint, the clause invites many insurers to find the smallest and least proximate of causes to deny claims. In the field, it invites them to find these alleged excluded causes, to argue for lower compromise and payment of claims.
Last week, I sent the article to all Merlin Law Group attorneys because Professor Swisher also suggested six ways policyholders could legally avoid the harsh result of anti-concurrent causation clauses. He made six recommendations that policyholders should use to defend against the anti-concurrent causation clauses:
1. Unambiguous anti-concurrent causation language must appear within the insurance policy itself Otherwise, a default efficient or dominant proximate cause interpretive rule should be applied.
2. Even if the anti-concurrent causation language is clear and unambiguous, the insurer may be held to have waived it or be estopped to deny it.
3. Some courts, applying a functionalistic reasonable expectations interpretive approach, rather than a formalistic plain meaning contractual approach, may declare that anti-concurrent causation clauses found in property insurance policies are invalid and unconscionable based on public policy grounds.
4. If a state has enacted a statute recognizing that the efficient or dominant proximate cause doctrine is applicable to insurance concurrent causation issues, the statute will prevail over any anti-concurrent causation clause language appearing in the policy.
5. Even in the absence of a state statute mandating an efficient or dominant proximate cause approach to concurrent causation disputes, a state court could still apply an efficient proximate cause doctrine if the anti-concurrent clause language excluded certain perils, no matter how insignificant those perils may have been to the loss.
6. The burden of proof on an insurer to uphold any exclusion under its anti-concurrent causation clause language in a property insurance policy should at least be as onerous as the burden of proof on a policyholder to prove coverage under the policy.
Insurance coverage interpretation is hard work. You have to commit yourself to becoming a great drudge of policy language that is full of exceptions, subparagraphs, and words which are often without definition. This article is a "must read" to better understand the context of these clauses and the historical place they hold in insurance contract law. For those representing policyholders, it can do you no harm and may help you and your client from another catastrophe—a finding of no coverage.
1 Peter Nash Swisher, "Why Won’t My Homeowners Insurance Cover My Loss?": Reassessing Property Insurance Concurrent Causation Coverage Disputes, 88 Tul. L. Rev. 515 (2014).
2 James A. Knox, Jr., Causation, The Flood Exclusion, and Katrina, 41 Tort Trial & Ins. Prac. L.J. 901, 925-26 (2006).