Concurrent Causation of Loss
Even before the devastation caused by Hurricanes Katrina and Rita, many homeowners insurance policies included a provision addressing “concurrent causation of loss.” While there are several different versions of concurrent causation provisions, all attempt to reduce or eliminate insurance coverage where two different perils, one covered by the policy and one excluded from coverage by the policy, act together, in concert or concurrently to cause damage or loss.
The term “peril” means an effect, action or force that causes damage or loss. The phrase “concurrent causation” generally refers to the combination or correlation of more than one peril that causes a specific damage or loss. Generally, if damage or loss is caused by a peril which is otherwise covered by the policy, as well as a peril that is not covered by the policy, then insurance coverage applies for the specific damage or loss. However, insurance policies often include provisions that attempt to modify that general rule.
Certain provisions state that insurance coverage is only applicable when the predominate or superior peril causing the damage is covered by the policy. Other provisions exclude all coverage when one of the two concurrent perils that cause loss or damage is not otherwise covered by the policy’s provisions.
An example to illustrate: Homeowners Insurance Policy A provides insurance overage for damage to the insured property caused by wind, but excludes damage caused by flood. Homeowners Insurance Policy A also includes a concurrent causation of loss provision stating that insurance is available under the policy only for loss caused by two or more different perils when the predominate peril producing loss is otherwise covered by the policy. Thus, if a home insured by Homeowners Insurance Policy A suffers major damage by wind concurrently with, or at the same time as, minor damage by flood, then the loss or damage would be covered by the policy. On the other hand, if the home suffers major damage by flood while only suffering minor damage by wind, then the entire loss would be excluded from coverage by the policy.
Another example: Homeowners Insurance Policy B provides coverage for damage caused by wind, but excludes damage caused by flood. Homeowners Insurance Policy B includes a concurrent causation of loss provision indicating that, when loss is caused by two or more different perils at the same time, if any peril causing damage is excluded under the policy, then the entire loss is excluded from coverage, even if the other perils would otherwise be covered by the policy. Thus, if a home insured by Homeowners Insurance Policy B suffers any damage by flood concurrently with any damage by wind, then the loss or damage would be excluded from coverage under the policy.
Property owners should read their property insurance policies carefully to determine if their policy includes a concurrent causation of loss provision, and understand what effect, if any, the provision might have on an insurance claim