Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/all-risk-policy/page/2/
Timestamp: 2019-04-26 11:55:33+00:00

Document:
The Florida Supreme Court resolved a conflict between the District Courts in applying the Concurrent Causation Doctrine where there were multiple causes creating the loss. Sebo v. Am. Home Assur. Co., 2016 Fla. LEXIS 2596 (Fla. Dec. 1, 2016).
After purchasing his home, John Sebo procured an "all risks" homeowners policy provided by American Home Assurance Company (AHAC). Shortly after Sebo purchased the property, water began to intrude the home during rainstorms. Major water leaks occurred. It became clear that the home suffered from major design and construction defects. In October 2005, Hurricane Wilma further damaged the home.
AHAC denied coverage for most of the claimed losses. It provided $50,000 for mold. The residence could not be repaired and was eventually demolished.
In January 2007, Sebo sued a number of defendants, including the sellers of the property, the architect who designed the residence, and the construction company that built the home. He alleged the home had been negligently designed and constructed, and that the sellers had fraudulently failed to disclose the defects in the property. Sebo amended his complaint, adding AHAC as a defendant. After Sebo settled with a majority of the other defendants, the trial proceeded only on his declaratory action against AHAC. The jurors found in favor of Sebo, and the court eventually entered judgment against AHAC.
On appeal, the District Court found that there was more than one cause of loss, including defective construction, rain and wind. The court disagreed with the decision issued by another District , Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. Ct. App. 1988). Wallach held that the concurrent causation doctrine should be applied in a case involving multiple perils and a first-party policy. Therefore, the District Court here reversed and remanded for a new trial in which the causation of Sebo's loss would be examined under the efficient proximate cause theory.
The Supreme Court noted that the efficient proximate cause provided that where there was a concurrence of different perils, the efficient cause - the one that set the other in motion - was the cause to which the loss was attributable. The concurrent cause doctrine, on the other hand, provided that coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or efficient cause.
The Florida Court observed that the concurrent causation doctrine originated with the California Supreme Court's decision in State Farm Mut. Auto Ins. Co. v. Partridge, 514 P.2d 123 (Cal. 1973). Where neither of two perils could have created the loss alone but instead combined to create the loss, the Partridge court could not identify the prime, moving, or efficient cause in order to determine coverage, and pronounced the new doctrine.
The District Court in Wallach found the efficient proximate cause doctrine to be of little assistance in cases where both causes of the harm were independent of each other. Therefore, Wallach held that "where weather perils combine with human negligence to cause a loss, it seems logical and reasonable to find the loss covered by an all-risk policy even if one of the causes is excluded from coverage."
One exclusion in Sebo's policy barred coverage for faulty design, workmanship, construction of all or part of the property. It was not in dispute that the rainwater and hurricane winds combined with the defective construction to cause the damage to Sebo's property. As in Partridge, there was no reasonable way to distinguish the proximate cause of Sebo's property loss - the rain and construction defects acted in concert to create the destruction of Sebo's home. Therefore, it was not feasible to apply the efficient proximate cause doctrine because no efficient cause could be determined. Where weather perils combined with human negligence to cause a loss, it seemed logical and reasonable to find the loss covered by an all-risk policy even if one of the causes was excluded from coverage.
Therefore, the District Court's decision was quashed and the case remanded for further proceedings.
The Ninth Circuit held that the efficient proximate cause doctrine is not limited to all-risk policies. Olin Corp. v. Continental Cas. Co., 2016 U.S. App. LEXIS 4905 (9th Cir. March 17, 2016).
Olin operated a plant that produced industrial chemicals. Continental issued a policy covering the plant's boilers and machinery. In late 2008, the machinery was damaged. Continental denied coverage for damage to Olin's diaphragm cells, which were tanks containing metal cathodes covered by asbestos diaphragms. Continental argued that the damage to the cells was not covered because it was not caused by an "accident." The jury returned a verdict in favor of Olin.
Continental appealed. It first argued that the district court erred in applying the efficient proximate cause doctrine. Under the doctrine, the peril that set in motion the chain of events leading to the loss or the "predominating cause" was deemed the efficient proximate cause or legal cause of the loss. The Ninth Circuit disagreed that the doctrine only applied to all-risk policies.
Next, Continental argued that because its policy covered only "direct damage" to covered property caused by a covered cause of loss, the policy language precluded the use of the efficient proximate cause doctrine. Under the policy language, coverage existed only when a covered peril was the last link in the causal chain that terminated in the damage, and not when a covered peril only sets in motion the chain of events leading to the loss. No cases were cited by Continental to support its argument, however. The court found that the use of "direct damage" in the policy was consistent with the efficient proximate cause doctrine.
Continental next contended that the district court erred in determining that the word "corrosion" in the policy was ambiguous as applied to the facts of this case. The issue was whether the term "corrosion" included the penetration of magnetite dendrites into asbestos diaphragms that were baked onto metal cathodes inside the cells. The Ninth Circuit determined that the district court correctly determined that whether this process was "corrosion" was ambiguous. The policy did not define "corrosion." Moreover, the asbestos diaphragms did not themselves corrode. Instead, the metal cathodes corroded, and byproducts of this corrosion penetrated the diaphragms, causing them damage. Because the word "corrosion" as applied to this case led to multiple reasonable interpretations, the district court correctly determined that the term was ambiguous.
The district court's judgment was affirmed.
The court reversed judgment in favor of the policyholder after finding that the trial court erred in giving its jury instruction on the efficient proximate cause doctrine. Citizens Prop. Ins. Corp. v. Salkey, 2016 Fl. App. LEXIS 2840 (Fla. Ct. App. Feb. 26, 2016).
The Salkeys had an all-risk homeowners policy from Citizens. The policy contained an exclusion for loss caused by sinkholes, but the Salkeys purchased a sinkhole loss coverage endorsement which provided coverage for "direct physical loss" caused by sinkhole activity.
The Salkeys presented a sinkhole claim to Citizens. The claim was denied after Citizens determined that the loss was caused by soils in a reclaimed mine zone. The Salkeys then sued for breach of contract.
At the trial, the parties disputed causation. The Salkeys' expert agreed that the reclaimed mine zone contributed to the damage, but testified that the sinkhole activity was the most substantial factor in the loss. Citizens' expert testified that there was no sinkhole activity and that the damage was caused by soils in the reclaimed mine zone.
The jury instructions stated that the burden of proof was on Citizens to prove that all of the damage was caused by conditions excluded by the policy. More specifically, Citizens had the burden to prove that all of the damage was non-sinkhole related.
During closing arguments, the Salkeys' attorney emphasized the burden-of-proof instruction, arguing that Citizens had to prove the damage was 100 percent non-sinkhole related. The jury returned a verdict for the Salkeys.
On appeal, the court ruled that the trial court erred as a matter of law by requiring Citizens to prove that no portion of the Salkeys' loss was sinkhole related. Once the insured proved a loss occurred during the policy period, the burden shifted to the insurer to show that the loss resulted from an excluded cause. Under a first party policy that involved multiple perils, the fact finder had to apply the efficient proximate cause doctrine to determine the cause of the loss. Under the efficient proximate cause doctrine, the jury had to determine which peril was the most substantial factor in the loss. If the efficient proximate cause of the loss was a covered peril, the loss was covered; if it was an excluded peril, the loss was not covered.
Here, instead of requiring Citizens to prove that the efficient proximate cause of the Salkeys' loss was an excluded peril not related to sinkhole activity, the trial court imposed a higher burden. It required Citizens to prove that all of the damage was excluded and non-sinkhole related. Therefore, the final judgment was reversed and the mater was remanded for a new trial.
The magistrate's recommended decision found that damage to plaintiffs' home caused by boats that became loose during Hurricane Sandy was not barred as "water borne material" under the surface water exclusion. Spindler v. Great N. Ins. Co., 2016 U.S. Dist. LEXIS 16532 (E.D. N. Y. Feb. 2, 2016).
Plaintiffs' home abutted the East Bay. The property had an exterior deck and a long dock that floated on the bay. Hurricane Sandy damaged plaintiffs' home and dock. A neighbor witnessed two boats, driven by the storm, repeatedly strike plaintiffs' dock, house, and deck. There was no dispute that water infiltrated plaintiffs' yard prior to the entry of the boats. Plaintiffs spent $286,280 to repair damaged items from the storm.
Plaintiffs had an all risk-policy with Great Northern. The policy did not cover loss caused by flood. The surface water exclusion stated the policy did not cover "flood, surface water, tidal water, overflow of water from a body of water, or water borne material from any of these . . ." An ensuing loss provision stated, "but we do insure ensuing covered loss unless another exclusion applies."
Great Northern denied coverage and plaintiffs filed suit. Cross-motions for summary judgment were filed. Great Northern argued that the boats constituted "water borne material." The policy did not define the phrase. The court found that the usage of "water borne material" suggested that it referred to something other than marine conveyances. The use of "water borne material" commonly included "enter," back up," "discharge," "overflow" or "located in the ground," processes one would generally associate with materials such as sand, silt and sewage. Therefore, "water borne material" appeared to exclude fugitive sailing vessels.
Further, the policy had multiple provisions dealing with "watercraft," a term that plainly incorporated vessels like those that damaged plaintiffs' property. Having failed to clearly define "water borne material" as including watercraft, Great Northern's reliance on this language of the surface water exclusion was misplaced.
Next, Great Northern argued that, even if the "water borne material" language was inapplicable, the damage inflicted by the storm-driven vessels constituted damage from flood, and was therefore excluded. There was evidence, however, that the property was undamaged by flood waters. Instead, the damage was caused by the physical collision with the watercraft, a peril distinct and separate from flood, and therefore not specifically excluded by the surface water exclusion.
Finally, the ensuing loss provision rendered the question of coverage beyond doubt. Because damage caused by the boats followed the entry of water, the boat damage was an ensuing loss to property that was not excluded by the policy.
The district court subsequently overruled Great Northern's objections to the magistrate's recommended decision. Spindler v. Great N. Ins. Co., 2016 U.S. Dist. LEXIS 30255 (E.D. N. Y. March 9, 2016).
Damage to the insureds' property caused by construction undertaken on the adjacent lot was covered under the insureds' property policy. Chubb Indem. Ins Co. v. 21 E. Cedar, 2014 U.S. Dist. LEXIS 79906 (N.D. Ill. June 12, 2014).
The insureds' home sustained damage contemporaneous with demolition, excavation, and construction taking place on a adjacent lot. Chubb paid benefits to the insureds for their loss, and then sought to recover as subrogee from the defendants who performed the construction.
The defendants argued there was no coverage under Chubb's policy. Faulty planning, construction or maintenance were excluded. An exception to the exclusion stated, however, "we do insure ensuing covered loss unless another exclusion applies." Defendants argued characterizing the damages as ensuing losses was purely semantic and self-serving, designed to involve the ensuing loss provision in order to protect Chubb's coverage determination. Chubb contended the exclusion applied only to the specific property being insured and not to a neighbor's property where work is being performed. Therefore, the faulty construction exclusion did not apply and the ensuing loss provision was triggered.
The court agreed with Chubb. It was reasonable to interpret the exclusion as applying only to faulty construction related to the insured property. All-risk policies were intended to cover fortuitous losses, not brought about by an insured's own misconduct, unless the losses were expressly excluded. It would not make sense to exclude coverage for mishaps entirely outside of the insured's knowledge or control merely because they occurred as a result of a neighbor's construction project.
The court denied the insurer's motion in limine seeking to dismiss the insureds' complaint due to the absence of expert testimony. Fabozzi v. Lexington Ins. Co., 2014 U.S. Dist. LEXIS 74069 (E.D. N.Y. May 30, 2014).
During the policy period, the insureds noticed their house had serious structural problems, including cracks in the walls and floors that were pitched toward the rear of the house. The insureds had to move from their house. When they submitted a claim, it was denied by Lexington because the losses were caused by "wear and tear, deterioration, earth movement, settlement, shrinking, bulging or expansion of the property leading to cracking of structural components."
The insureds sued. Lexington filed a motion in limine to preclude the testimony of the insureds' expert and to dismiss the complaint for inability to offer prima facie proof of a covered loss absent such expert testimony.
It was the insureds' burden to show the policy covered the loss, i.e., that the loss resulted from a covered peril. The court determined, however, that it was not necessary to have expert testimony to establish the cause of the collapse. There were some instances that the cause of a building's collapse could be so apparent that no special knowledge was required, and lay testimony could be relied upon.
Liberty also contended that the insureds could not establish the damages without expert testimony. The insureds, however, believed that they had suffered a total loss, and that they could prove the value of their loss without expert testimony. The court was not willing to hold, as a matter of law, that the prima facie damages required expert testimony.
Accordingly, Liberty's motion in limine seeking dismissal of the complaint was denied.
The court denied the insurer's motion for summary judgment on plaintiff's breach of contract claim because there was a disputed issue of fact regarding the applicability of the vandalism exclusion. Poole v. Untied Servs. Auto. Assn., 2014 N.Y. Misc. LEXIS 2394 (N.Y. Sup. Ct. May 16, 2014).
The plaintiff rented a residence to tenants. The tenants performed repairs to the residence which resulted in damage in excess of $126,000. The tenants vacated the residence. The plaintiff submitted a claim to USAA for benefits under her homeowners' policy.
USAA denied coverage based upon exclusions for damage caused by, among other things, faulty workmanship, renovation and remodeling. Plaintiff sued and USAA moved for summary judgment.
The policy did not insure loss caused by vandalism if the dwelling had been vacant for more than 30 consecutive days. USAA's motion was denied because it failed to establish that pliantiff's loss resulted from a cause other than vandalism. Although the policy excluded for loss arising form inadequate renovations or workmanship, USAA failed to establish, as a matter of law, that the work done by the tenants, which allegedly was performed without plaintiff's permission, constituted renovations rather than mere vandalism.

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