Concurrent Causation: Explained by a Public Adjuster

Causality or causation is the relationship between cause and effect. For example, if we eat too much junk food and don’t exercise (cause), we’ll gain weight (effect). It seems straightforward and logical. However, causation, and especially concurrent causation, can get very complex.

Concurrent causation in property insurance claims refers to damages caused by both a covered event and an excluded event, either in sequence or simultaneously.

Will your insurance company settle your claim when an excluded event is at least partly to blame for the damages you suffered? The answer to this question has changed many times throughout the years, and the state you live in plays an important role.

Note: Since Avner Gat, Inc. operates in Southern California, special attention will be given to how California treats concurrent causation.

Concurrent Causation in Property Insurance

In order to understand how concurrent causation is treated in property insurance claims, we have to go back a bit in history.

In the early 1980s, lower courts in California typically held insurance companies liable for both covered events and excluded events if they occurred simultaneously or in sequence.

Example:

During a storm, heavy winds blow over a tree. The tree falls on a house causing damage that is compounded by rain. At the same time, a landslide occurs, causing further damage.

Most homeowners insurance policies typically cover damages caused by wind and rain but not damages caused by landslides. However, under the concurrent causation doctrine, the insurer might be liable for all damages, including those caused by the landslide.

As a way to limit their liability, insurance companies introduced anti-concurrent causation clauses.

Anti-Concurrent Causation (ACC) Clauses

Anti-concurrent causation clauses protect insurance companies when both a covered event and an excluded event simultaneously or in sequence cause damage to a property.

Here is an example of an anti-concurrent causation clause:

“We will not pay for loss or damage caused directly or indirectly by any of the following [excluded events]. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”

Such clauses allow insurance companies to limit their liability to covered events only. Should both a covered event and an excluded event “concurrently or in any sequence” cause property damage, there would be no coverage.

Referring back to our previous example of a house that sustained damage caused by wind, rain, and a landslide. If the insurance policy had an ACC clause, the homeowner would not be able to claim damages since an excluded event (landslide) contributed to the damages.

Many states accept the validity of ACC clauses. It’s based on the principle that the parties have a right to enter into a contract that stipulates what the policy will and won’t cover.

Note: A small number of states, including California, don’t enforce ACC clauses.

Proximate Cause and California Law

The way concurrent causation cases are handled today are different from the verdicts of lower courts in California during the early 1980s.

Most states, including California, follow the efficient proximate cause doctrine.

If both a covered event and an excluded event occur concurrently or in sequence, the proximate cause is the predominant cause that sets the other causes in motion.

If the proximate cause is a covered event, the insurer is typically liable for the damages. But if the proximate cause is an excluded event, there would typically be no coverage.

California Insurance Code 530 and 532

The efficient proximate cause doctrine is codified in California Insurance Code 530, that states:

“An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.”

The above statute appears to be in conflict with California Insurance Code 532, that states:

“If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of the loss was a peril which was not excepted.”

However, Code 532 isn’t in conflict with Code 530. Courts use a “but for” test.

The court imagines what would happen if one of the events didn’t occur. If damage would have occurred anyway with or without the occurrence of the removed event, the removed event fails the “but for” test and cannot be selected as the proximate cause.

Referring back to our original example of a house in California that sustains damage caused by wind, rain, and a landslide. If we remove the landslide, damage caused by wind and rain would have occurred anyway. It fails the “but for” test and cannot be the proximate cause. If we remove the wind and rain, the property would not have suffered any damage. This makes wind and rain the proximate cause.

Based on the above, under the efficient proximate cause doctrine, the insurance company is liable to pay for damages since the proximate cause is a covered event.

California Insurance Code 530.5 specifically mentions landslides. It states:

“If a loss or damage results from a combination of perils, one of which is a landslide, mudslide, mudflow, or debris flow, coverage shall be provided if an insured peril is the efficient proximate cause of the loss or damage and coverage would otherwise be provided for the insured peril. Coverage shall be provided under the same terms and conditions as would be provided for the insured peril.”

The above statute makes it clear that if an insured event is the efficient proximate cause, that coverage will be provided for landslide damage.

Conclusion

Insurance claims involving concurrent causation where damages were caused by both covered and excluded events can get very complex.

Insurance companies typically rely on anti-concurrent causation (ACC) clauses in an attempt to limit their liability. Although many states accept the validity of ACC clauses, these clauses are unenforceable in California if they conflict with the efficient proximity doctrine.

Property insurance claims in California involving concurrent causation are handled according to the efficient proximity doctrine, under Insurance Code 530.

• If the proximate cause is a covered event, the insurer is typically liable for the damages, including damages caused by an excluded event.
• If the proximate cause is an excluded event, there would typically be no coverage, including for a covered event.

Managing a large or complex insurance claim can be a nightmare.

An experienced, reputable, and licensed public adjuster can help you overcome the challenges of managing your homeowners insurance claim.

Avner Gat, Inc. has 17+ years of experience as a public adjuster in Southern California. We protect homeowners from the games and fine print that insurance companies are known for.

Call us at (818) 917-5256 to find out how we can assist you.