May 9, 2008
Most property insurance policyholders do not realize the extent to which their coverage has been undermined by a pernicious form of mega exclusion called anti-concurrent causation clauses, which appear in a preamble to a policy’s exclusion section. Whereas an ordinary exclusion bars coverage for one specific kind of loss, the anti-concurrent causation clause seeks to bar coverage in every situation where an excluded peril is one of two or more clauses—or even the result of a covered cause of loss. These provisions lie at the heart of the wind and rain v. flood debate raging in the Gulf Coast in the wake of Hurricane Katrina, but their reach goes much further. Policyholders must be alert to the presence of those clauses when buying property coverage, and aware of how the courts are interpreting them when claims are made.