By David G. Seely and Mary M. Mason*
Many people assume that because they have an insurance policy—whether it be for their home, auto, or business—that they will be covered for damages sustained regardless of the circumstance. This, however, is not always the case. For example, a homeowner might be covered for rain damage, but not covered for damage caused by faulty workmanship. What happens when a roof is not installed properly, and rainwater then leaks into the house causing damage to the walls, floor, and ceiling? Both the rain and the faulty workmanship are causes of the damage to the home, but one of the causes—the faulty workmanship—is explicitly excluded from coverage. The question of whether or not the homeowner is covered can be answered by the Concurrent Causation Doctrine.
The Concurrent Causation Doctrine applies when a covered risk and an excluded risk combine to create one indivisible injury. The Doctrine states that even though one of the causes of the injury was explicitly excluded from coverage under the insurance policy, the insurer is still required to cover the entire loss so long as the injury was caused jointly by an insured risk and by an excluded risk independently of each other. Almost every state has now adopted the concurrent causation doctrine.
While there are only a few Kansas cases that address concurrent causation, there are numerous cases from other jurisdictions that discuss the issue. Concurrent causation issues can arise in a wide variety of circumstances. The preeminent case that established the Concurrent Causation Doctrine is a California Supreme Court opinion called State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d 123 (Cal. 1973). In that case, a hunter (ironically named Partridge) filed down the trigger mechanism of his pistol to lighten the trigger pull so that the gun would have “hair trigger action.” Later, Partridge and two friends were driving in the countryside and hunting jackrabbits by shooting out of the windows of a moving vehicle. When the vehicle hit a bump, Partridge’s modified gun discharged and severely injured one of the other occupants. Partridge had automobile and homeowner’s insurance through State Farm. He was covered under his automobile liability policy because the accident bore a causal relationship to the use of the insured vehicle, and State Farm paid the injured party the proceeds available under that policy. There was a dispute, however, as to whether State Farm also had to provide coverage under Partridge’s homeowner’s insurance policy.
Partridge’s homeowner’s policy contained comprehensive coverage for all personal liability not falling within the specific exclusionary provisions of the policy. One of the exclusions provided that there was no coverage for bodily injury “arising out of the use of any motor vehicle.” The question for the court was whether Partridge was covered under only his automobile insurance, or also under the liability portion of his homeowner’s policy notwithstanding the automobile exclusion, since Partridge’s modification of his firearm was not an act associated with the use of his vehicle.
In conducting its analysis, the California Supreme Court crafter and applied the Concurrent Causation Doctrine, and held that when a non-automobile risk and an automobile risk constitute concurrent proximate causes of a single accident, overlapping coverage is appropriate. The court explained that the act of filing the gun down to create a hair trigger release was an independent, but concurrent cause that was covered under Partridge’s homeowner’s policy. Even though Partridge’s negligent act of filing the gun down was combined with the separate independent act of operating the weapon in his car that was excluded under the policy, the court held that Partridge was covered under both the home and auto policies.
The Kansas federal court, applying Kansas law, followed Partridge and applied the Concurrent Causation Doctrine in a similar case. In Estate of Pennington v. Wolfe, 262 F. Supp. 2d 1254 (D. Kan. 2003), a piece of farm equipment fell out of the bed of a truck operated by the defendant, Wolfe, and landed on the roadway. Wolfe did not immediately stop to retrieve the equipment or warn others of the danger, but continued driving. This caused another vehicle traveling on the road to swerve into an oncoming semi-truck while trying to avoid hitting the equipment. Wolfe’s automobile insurance carrier settled under its policy but a claim against Wolfe’s farm and ranch policy remained and suit was filed. Like the defendant in Partridge, Wolfe had personal liability coverage under that farm and ranch policy, but the policy contained an exclusion for injuries arising out of the use of an automobile.
The court held that there was coverage under both policies because there were two separate and independent acts of negligence that caused the injury. First, the driver failed to properly secure the farm equipment to his truck, which was a negligent act connected to his operation of the truck and covered under the automobile policy. Second, once the equipment broke loose, the driver had a separate duty to remove the hazard from the highway or warn others of the danger, and his failure to do so was a negligent act covered under his farm and ranch policy. The court held that under the Concurrent Causation Doctrine, the insurance company that issued the farm and ranch policy was required to provide coverage, even though one of the indivisible causes of the resulting accident was explicitly excluded from coverage.
In response to the Concurrent Causation Doctrine, insurance companies now often include a new exclusion in their contracts: the Anti-Concurrent Causation Clause (ACC). An insurance policy will provide that coverage is excluded if the loss or damage falls within one of the policy’s enumerated exclusions. An ACC clause adds that “Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” These clauses have generally been held to be enforceable as long as they use clear and specific language. See, e.g., Gallegos v. Safeco Ins. Co. of Am., 646 Fed. Appx. 689 (10th Cir. 2016); State Bank v. BankInsure, Inc., 823 F.3d 456 (8th Cir. 2016); New York University v. Factory Mut. Ins. Co., 374 F. Supp. 3d 315 (S.D.N.Y. 2019).
It is important for individuals and businesses to be aware of the possibility of an ACC clause in their policies that could affect them later. This became apparent during the Covid-19 pandemic when many businesses looked to their business interruption coverage to recover damages caused by the loss of business revenue. Most business policies contain an exclusion for damages caused by a virus, but the business owners argued that the virus was not the sole cause of their damages. They contended that mandatory closure orders issued by government agencies were the true cause of their loss and that there was no exclusion in the policy that would prevent coverage for that cause.
While this argument may have had some validity under the Concurrent Cause Doctrine, most business were disappointed to learn that their policies included an ACC clause, and that because a virus was part of the causal chain causing the loss, coverage was excluded. See, e.g., Hamilton Jewelry, LLC v. Twin City Fire Ins. Co., Inc., 560 F. Supp. 3d 956 (D. Md. 2021); N&S Rest. LLC v. Cumberland Mut. Fire Ins. Co., 499 F. Supp. 3d 74 (D.N.J. 2020); Leal, Inc. v. Twin City Fire Ins. Co., 573 F. Supp. 3d 648, (D. Conn. 2021), appeal withdrawn, No. 21-3023, 2022 WL 2103050 (2d Cir. Mar. 30, 2022); Wilson v. Hartford Cas. Co., 492 F. Supp. 3d 417 (E.D. Pa. 2020), aff’d sub nom., Wilson v. USI Ins. Serv. LLC, 57 F.4th 131 (3d Cir. 2023).
Even beyond Covid-19, businesses can be blindsided by a lack of coverage due to an unexpected ACC in their policy. For example, in ABK, LLC v. Mid-Century Ins. Co., 454 P.3d 1175 (Idaho 2019), ABK owned and operated a gas station and convenience store. ABK was insured by Mid-Century under a Business Owners Special Property Coverage Form which covered any physical loss or damage, except for those specifically excluded, including surface water infiltration. When ABK’s underground storage tanks were damaged due to water infiltration into the gas stored in the tanks, Mid-Century denied coverage based on the surface water exclusion. In response ABK argued that groundwater and surface water combined to cause the damage. However, because the policy contained an ACC clause, if was sufficient for Mid-Century to present evidence that surface water was a cause even if it was not the sole cause of the damage. ABK was therefore out of luck when it came to coverage.
Businesses, as well as individuals, should be aware that most jurisdictions follow a “freedom of contract” approach to insurance policies, meaning that the parties are free to agree on the terms of coverage and those terms will be enforced unless they are ambiguous or contrary to public policy. Applying this principle, most jurisdictions hold that if a policy contains an ACC clause, then even if 99% of the loss was caused by a covered hazard and 1% by an excluded risk, coverage for the entire loss will be excluded. Mark M. Bell, A Concurrent Mess and A Call for Clarity in First-Party Property Insurance Coverage Analysis, 18 Conn. Ins. L.J. 73, 87 (2012).
Thus, while the Concurrent Causation Doctrine can help homeowners, drivers, and business owners to expand their coverage, many insurance companies have contracted around the doctrine by inserting Anti-Concurrent Causation clauses into policies. If you have any questions regarding your insurance coverage, contract any of Fleeson Gooing’s litigation and business attorneys.
* Ms. Mason is currently a student at the University of Kansas School of Law. She worked as a summer law clerk at Fleeson Gooing during the summer of 2023. She expects to receive her Juris Doctor degree in 2025.