Concurrent Causation: An Adjuster's Dilemma

ADJUSTINGTODAY.COM

During both of those events property owners incurred damage from a windstorm—which is generally covered under property insurance policies— followed by damage from a resulting flood and/or storm surge, which is generally excluded (but available through separate flood policies).

As others had previously experienced, distressed policyholders learned that structural damage caused by high winds might not qualify for coverage if the damage was compounded by flood waters or if it could not be determined how much of the damage was caused by wind as opposed to water. Numerous claims ended up in court, with some claimants arguing, among other things, that the Katrina damage resulted from the failure of a levee system, not from natural flooding.

For the most part, however, property insurers have prevailed in their attempts to enforce ACC exclusions. Furthermore, post-Sandy legislative initiatives to ban such exclusions in NewYork and New Jersey quickly faded as legislators came to fear the potentially negative effects a ban might have on their domestic insurance markets.

According to a table provided online by the law firmTimoney Knox, LLP, 1 as of October 2017 courts in 31 states and the District of Columbia had definitively enforced the application of ACC clauses.

Background

Concurrent causation issues are vexing for adjusters because a rigorous and conscientious investigation of a claim can uncover causes that eliminate an insured’s recovery for damage that under other circumstances would have been covered.

Furthermore, ACC provisions give policyholders an incentive to look first for the excluded cause of loss, so they don’t get their hopes up and waste their time pursuing a claim that will likely be denied.

‘Anti-concurrent causation’ (ACC) provisions have been around since the 1980s, but the concept and its application was scrutinized and tested again in the aftermath of Hurricane Katrina in 2005 and Superstorm Sandy in 2012.


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