Last week, I had the pleasure of presenting at the Spring Meeting & Seminar of the Professional Public Adjusters Association of New Jersey (“PPAANJ”). One of the more thoroughly discussed topics during my presentation was a recent New Jersey federal court decision involving insurance policy language commonly known as an anti-concurrent/anti-sequential causation clause.1 The clause bars coverage when two identifiable causes-one covered and one not covered-contribute to a single loss.2
In that case, after Superstorm Sandy, an insured submitted a claim for sustained damage to its homeowner’s insurer. The insurer inspected the property and determined that high winds caused and contributed to damage to certain portions of the property. The insured then hired its own inspector to assess the damage and prepare an estimate of the costs of repairs. The insured’s inspector identified the same portions of the property as wind-damaged as the insurer’s inspector (though with more extensive and costly repairs). The insured also hired a causation expert, who concluded that first wind, then flooding, caused additional damage to the insured’s in-ground pool, boardwalk and electrical transformer.
The insurer sought to dismiss the insured’s damages claim as to to the in-ground pool, boardwalk and electrical transformer arguing that the anti-concurrent/anti-sequential causation clause in the insurance policy barred any recovery for damages arising from both wind (a covered peril) and flood (an excluded peril).
The court agreed with the insurer, noting that federal and state courts in New Jersey have applied and enforced similar anti-concurrent/anti-sequential causation provisions “to exclude all coverage for a loss occasioned by a flood, even when a flood acts concurrently or sequentially with a covered peril.” The policy’s anti-concurrent/anti-sequential clause barred recovery for the in-ground pool, boardwalk and electrical transformer because the insured’s own expert concluded that first wind, and then flooding, caused the damage to those items.
This case highlights that—depending on your jurisdiction—an anti-concurrent/anti-sequential causation clause within an insurance policy may apply to bar a claim even where a covered peril causes damage prior to an excluded peril.
1 Zero Barnegat Bay, LLC v. Lexington Ins. Co., 2019 WL 1242436 (D.N.J. March 18, 2019).
2 By way of example: “We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”