The New York State Assembly’s insurance committee on Thursday approved a bill that would prohibit the insurers’ use of anti-concurrent causation (ACC) clauses in the state. The bill, A07455, is now eligible to be voted on by the entire Assembly.
Meanwhile, the state Sen. James Seward (R/C/I-Oneonta), who chairs the Senate’s insurance committee, introduced a companion bill this week. The bill, S05581, has been referred to the Senate insurance committee on May 22.
The Assembly bill A07455 can “now be voted on by the entire Assembly though it has not yet been put on the agenda to be voted on by the Assembly,” according to the office of Assemblyman Kevin Cahill (D-Kingston) who chairs the Assembly’s insurance committee. The bill was approved by more than half of the two-dozen members who comprise the Assembly’s insurance committee. The bill could be amended going forward and it would not have to go back to the insurance committee, the spokesperson said.
There are currently four states that have either statutes or reported decisions that eliminate or limit application of anti-concurrent causation clauses, said William Krekstein, a partner at insurance law firm Nelson Levine de Luca & Hamilton. Those four states are California, North Dakota, West Virginia and Washington. The following are more detailed information on those states.
• California – § 530 of the California Insurance Code provides that “[a]n 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.” Anti-concurrent causation clauses are valid and enforceable to the extent that they comply with the § 530. See Julian v. Hartford Underwriters Ins. Co., 35 Cal. 4th 747, 751, 110 P.3d 903, 905 (2005).
Additionally, § 532 states that “[i]f 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.” In construing this statute with § 530, the California Supreme Court has stated that “the ‘but for’ clause of section 532 necessarily refers to a ‘proximate cause’ of the loss, and the ‘immediate cause’ refers to the cause most immediate in time to the damage.” Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 402, 770 P.2d 704, 707 (1989)(citing Sabella v. Wisler, 59 Cal. 2d 21, 377 P.2d 889 (1963)).
• North Dakota – North Dakota has two statutes that operate largely the same as the California statute: N.D. Cent. Code Ann. § 26.1-32-01 and N.D. Cent. Code Ann. § 26.1-32-03. Additionally, the North Dakota Supreme Court has held that anti-concurrent causation clauses are unenforceable to the extent that they conflict with these statutes. See W. Nat. Mut. Ins. Co. v. Univ. of N. Dakota, 643 N.W.2d 4, 14 (N.D. 2002).
• West Virginia – In adopting the efficient proximate cause doctrine, the Supreme Court of Appeals of West Virginia in Murray v. State Farm Fire & Cas. Co., 203 W. Va. 477, 509 S.E.2d 1, (1998) held that the policy’s anti-concurrent causation language did not preclude use of the efficient proximate cause doctrine to determine coverage. Murray. at 490, 14.
• Washington – In Vision One, LLC v. Philadelphia Indem. Ins. Co., 174 Wash. 2d 501, 276 P.3d 300 (2012), the Supreme Court of Washington stated that “the efficient proximate cause rule mandates coverage, even if an excluded event appears in the chain of causation that ultimately produces the loss.” Vision One, at 518, 309.
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