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Insurance Law – The Anti-Concurrent Causation Clause

February 27, 2017

MICHAEL J. RANKIN reports on a recent New Jersey case dealing with insurance coverage for property damaged by winds and flooding caused by Hurricane Irene. 

Plaintiffs were the owner and tenant of property insured by defendant.  On August 27, 2011, the property was damaged.  At that time, Hurricane Irene had made landfall and caused severe flooding to the surrounding area.  The owner-plaintiff of the property made a property damage claim to defendant.  Defendant denied coverage because “flooding and surface water” caused the damage, and the policy excluded coverage for damage caused solely or in part by flooding. 

Plaintiffs disputed the defendant’s findings, arguing that the damage was caused solely by sewage back-up.  Plaintiffs did concede, however, that the area surrounding their building was flooded. 

Plaintiffs filed a declaratory judgment complaint seeking coverage for their loss.  The trial court granted defendant’s motion for summary judgment.  The trial court acknowledged that while no one saw flooding in the property, the area around the property was flooded.  The trial court also drew a favorable inference that part of the damage was caused by a sewer back-up, but concluded that floodwaters infiltrated the first floor of the property causing damage. Also, plaintiffs provided no evidence contrary to defendant’s evidence that the building was flooded other than the tenant-plaintiff’s self-serving affidavit that he, himself, did not see any water at the property. 

Plaintiffs appealed the trial court’s decision arguing, amongst other things, that there was a genuine issue of material fact (i.e., a triable issue) as to whether the property was damaged by flood or by sewer back-up, asserting that sewer back-up would be covered under the policy. 

The Appellate Division rejected plaintiffs’ argument.  When considering the evidence in the light most favorable to plaintiffs, the Appellate Division held that the trial court properly concluded that flooding also caused the damage.  Defendant produced evidence revealing: (1) a neighbor observing the property flooded with about three feet of water; (2) a contractor who repaired the damage finding mud and dirt in the interior of the premises; (3) a third-party tenant stating that the water was knee deep at the property on August 28, 2011; and (4) the expert engineer report stating that “the combination of surface water and area-wide flooding” around the property caused the water damage.  The plaintiffs, however, failed to provide any evidence disputing that a flood in part caused damage to the property.  

This case is another reminder on how important it is to confirm what an insurance policy covers and its exclusions before making a determination to purchase the policy, or determining whether additional coverage and/or an additional policy (example, flood insurance) is warranted.

It is not uncommon for property policies to contain what is commonly known as an “anti-concurrent causation clause” excluding coverage for certain damage to property, including, amongst other things, damage caused, directly or indirectly, by flooding, surface water, waves, tides, an overflow of any body of water, or their spray, whether or not driven by wind (including storm surge) andregardless of any other cause or event that contributes concurrently or in any sequence to the loss.”  In this case, the policy included an “anti-concurrent causation clause” that excluded property damage claims caused directly or indirectly by flooding and surface water intrusion.  Even though there may have been property damage caused by sewer back-up (an alleged covered loss), the claim was still denied because the overwhelming evidence pointed to flood and surface water intrusion being a contributing factor to the claimed damage. 

Please contact Michael J. Rankin if you have any questions or need any assistance in connection with this subject.