A Little-Known Doctrine Could Determine Whether Your Property Insurer Pays

Many property owners are unaware of the anti-concurrent causation doctrine in their insurance policies. Are you aware of it? Isaac Wiles Partner Sam Pipino shares insights on why it’s crucial to review your policy carefully and understand how it could impact you before disaster strikes.

Lurking inside many property insurance policies is a key doctrine unknown to many businesses and homeowners. As a result, they may think they have coverage for certain perils when, in truth, they do not.

This doctrine is known as anti-concurrent causation. Never heard of it? Neither have most people who aren’t members of the insurance industry or lawyers, like me, who work in this specialty area. But it is important to know – and know how to address before a problem arises.

A typical property insurance policy grants coverage for different types of losses or damage, as well as exclusions that bar coverage for certain scenarios. It is conceivable that a property owner could seemingly be covered by one part of their policy, but excluded by another part of the same policy.

How do insurers reconcile this conflict? That is where the doctrine for anti-concurrent causation comes into play. It means if something covered in the policy contributed to the loss, and something not covered (or excluded) was triggered by the first cause and also contributed to the loss, the loss is not covered.

Example: A restaurant is struck by lightning, which is covered under the eatery’s policy. The resulting, 24-hour power outage – which results in all of the food inside the cooler and freezer being spoiled – is not a covered cause of loss under the policy. Under anti-concurrent causation, this event is not covered.

Concurrent causation, which can be similarly confusing and also unknown to many policyholders, comes into play when a loss is the result of two or more simultaneous (concurrent) causes. If one cause of loss is covered, but another is not, the insurer will cover the loss.

Still confused? Don’t worry; that’s what lawyers are for. In one case I dealt with, a homeowner filed a claim for water damage from flooding. All of their basement furniture and belongings were ruined. While their policy excluded flood damage, it also included a special endorsement that provided coverage when sewers or drains backed up, which was the case for this homeowner.

What did the insurer decide? Not covered, because the flood exclusion carried anti-concurrent causation language. The homeowner may still come out okay on this, because they may be entitled to flood coverage available from the federal government.

To prepare themselves for this little-known but significant doctrine, businesses and homeowners subject to certain perils that may be out of the ordinary should review their policies with their insurance agent. They will want to make certain those perils are covered and are not subject to anti-concurrent causation clauses.

Otherwise, they may be in for a costly surprise when the next lightning bolt or flood strikes.