In Sebo v. American Home Assurance Co., the Florida supreme court ruled that an entire property insurance claim may be covered where there are multiple concurrent causes of loss and at least one is covered under a policy. Insurers might be able to defeat claims if they can show that an excluded risk prompted a chain of events causing damage. Sebo’s home was damaged from rainstorms and Hurricane Wilma — and possibly from design and construction defects in the home — which were excluded under the policy. The insurer refused to cover all the storm damage based on a policy exclusion that barred coverage for “any loss caused by faulty, inadequate, or defective . . . design, specifications, workmanship, repair, [or] construction . . .” The insurer denied coverage based on its position that where multiple perils caused the same loss, a loss is only covered if an insured peril was the “efficient proximate cause” of the loss – i.e., the cause “that set the other in motion.” An intermediate appellate court tossed out a jury verdict for the homeowner/policyholder. But the Florida Supreme Court reinstated the trial court’s verdict.
The Florida Supreme Court adopted the “concurrent cause doctrine,” which holds that there may be coverage “where an insured risk constitutes a concurrent cause of the loss even where the insured risk [is] not . . . the prime or efficient cause of the accident.” See Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988). Importantly for policyholders, the court endorsed the view that “[w]here 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….”
The court stated:
Also not in dispute is that the rainwater and hurricane winds combined with the defective construction to cause the damage to Sebo’s property. As in Partridge, there is 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. As such, it would not be feasible to apply the EPC [Efficient Proximate Cause] doctrine because no efficient cause can be determined. As stated in Wallach , “[w]here 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.” Wallach , 527 So. 2d at 1388. Furthermore, we disagree with the Second District’s statement that the CCD [Concurrent Cause Doctrine] nullifies all exclusionary language and note that [the insurance company] explicitly wrote other sections of Sebo’s policy to avoid applying the CCD. Because [the insurance company] did not explicitly avoid applying the CCD, we find that the plain language of the policy does not preclude recovery in this case.