Coverage questions under an “all-risk” insurance policy, in their simplest form, are typically determined by whether the peril is expressly limited or excluded. But what happens when multiple perils, both covered and excluded, combine to cause a loss? From this scenario developed the theory of “concurrent causation.”
While several states began developing case law surrounding concurrent causation in the early 1970’s, the Colorado Supreme Court first recognized their solution to this problem, “The Efficient Moving Cause Rule,” in 1989.1 The Rule provides that where there are multiple or concurrent causes of the same loss, the loss must be attributed to the cause that set the others in motion.
However, there remains one additional prong to the concurrent causation analysis. Unsatisfied with the developing law surrounding concurrent causation, insurance policies began to include language which excluded loss or damage, regardless of any other cause or event, that contributed concurrently or in any sequence to the loss. This exclusionary language has become known as “anti-concurrent” causation language and typically reads:
We do not insure under any loss which would not have occurred in the absence of one or more of the following excluded events . . . regardless of (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these . . . .
While several states require the excluded loss to be a substantial factor in causing the loss, the Colorado Supreme Court has followed the majority of jurisdiction in interpreting anti-concurrent causation language to preclude recovery of any loss where that loss was caused in part by a peril excluded by the policy.2 The Colorado Supreme Court concluded that, to enforce the efficient moving cause rule in light of such language, would require the court to “rewrite a contract.”
The devastating consequences of this Colorado Supreme Court decision were recently demonstrated in a claim involving a roof collapse after a three-day spring snowstorm deposited a record-setting amount of wet and heavy snow on the roof of a city owned hot springs pool building in 2001. The building was insured under an all risk policy, which excluded coverage—pursuant to anti-concurrent language—for loss caused or contributed to by wear, tear, rust, corrosion, decay, and deterioration. The carrier denied coverage for all damage to the roof under this anti-concurrent exclusion.
A jury ultimately determined that the cause of the damage was 90% attributable to the weight of the snow and 10% attributable to other conditions including those outlined in the anti-concurrent exclusion. The carrier appealed apportionment of covered and excluded causes. In holding that the carrier had no obligation to reimburse the city for this loss, the Colorado Court of Appeals explained that the anti-concurrent exclusion clause denied coverage whenever an excluded peril and covered peril combine to damage a dwelling or personal property.3
While Colorado follows the efficient proximate cause doctrine when determining whether a loss involving multiple perils is covered, under current Colorado law, if the carrier has included anti-concurrent causation language and can point to some event in the chain of events that was excluded, the carrier can deny coverage to their insured for an otherwise covered loss. Unfortunately, this allows carriers to preclude coverage for losses concurrently caused as little as 1%, by uncovered causes, creating illusory coverage and depriving policyholders of their reasonable expectations. These recent decisions stress the importance of closely reviewing the policy and applying the facts of each loss to the specific language outlined in the policy.
1 Kane v Royal Ins. Co. of America, 768 P.2d 678 (Colo. 1989).
2 Id. at 684-85.
3 Colo. Intergovernmental Risk Sharing Agency v. Northfield Ins. Co., 207 P.3d 839, 842 (Colo.App.2008).