Posted On: January 12, 2007, 11:42 pm CST

Posted By: Clarity Missing

The insurance industry may want to believe the typical anti-concurrent causation clause is clear in its meaning, but it isn't. And that's a problem.

Say the clause in use is that "We do not cover loss to any property resulting directly or indirectly from any of the following. Such a loss is excluded even if another peril or event contributed concurrently or in any sequence to cause the loss.''

This says that flood damage is excluded, even if some other peril also caused damage. What it does *not* say is that damage from the *other* peril is also excluded.

If it can be demonstrated factually that, as the homeowners in this case claimed, their home was blown off its foundation by wind, and then blown apart by wind, before the storm surge hit, then what the anti-concurrent causation clause says is that the damage from flooding is excluded.

Nowhere does it actually say that the damage from wind is excluded. And of course it's a contract of adhesion, so if it can be interpreted two ways, it must be interpreted in favor of the policy holder, not the company.

That's what the judge cited in awarding actual damages -- State Farm did not demonstrate that the damage was all flood damage, and therefore excluded. If it was wind damage, it was not excluded by the anti-concurrent causation clause. Quoting the New York Times on this:

[Begin Quote]
Judge Senter agreed in a ruling that the insurers were not obligated to pay for flood damage. But he said that when both wind and water damaged or destroyed a house, it was the burden of the insurance company to prove how much of the loss was because of water and pay for any wind damage.

A clerk for Judge Senter said in a telephone interview from Gulfport that experts for State Farm acknowledged in court documents that some damage to the Broussard's home had come from wind. But, he said, "they did not offer evidence during trial" showing how much of the damage was from water and how much from wind, as Judge Senter had required.

Ultimately, he said, the judge ruled that State Farm was liable for all the damage because the insurer had not provided enough evidence "the jury could use to segregate" the wind from the water damage.
[End Quote]