Insurance Law

May 1 potpourri

By David Rossmiller

Again, time is very limited today, so this will have to suffice.

-- I saw this story in the Insurance Journal that, following the Fifth Circuit's opinion in Broussard v. State Farm, the case has settled, so there won't be any new trial.    

-- This item from the Las Vegas Sun on a sudden increase in interest following an earthquake in Utah is interesting: 

Fuller said most people usually don't buy earthquake insurance because of its cost, the belief that an earthquake won't happen in Utah or that the federal government would help in an emergency.

But since Hurricane Katrina hit New Orleans in 2005, fewer people have been willing to rely on the belief in government help, Fuller said.

"I think before Katrina, people saw FEMA as the answer to getting a house rebuilt," he said. Fuller said the largest factor that keeps people from buying earthquake insurance, though, is its cost, which can double the price of homeowner insurance. Deductibles for earthquake insurance, usually set at 5 or 10 percent of the cost of rebuilding, are higher than normal home coverage

If you read the story, however, you'll see the actual numbers reported are tiny, certainly no indication of a trend. 

-- The Foti Albatross

Former Louisiana Attorney General Charles Foti is probably missed greatly by Mississippi AG Jim Hood -- Foti made him look super-competent in comparison. Another story here about cleaning up the debris of Foti. 

-- Recent anti-concurrent cause decision in federal court in Florida

My attention was called to a summary judgment opinion of the federal district court for the Northern District of Florida, in Empire Indemnity Ins. Co. v. Winsett. 

Florida uses a causation analysis in first-party property claims that is unusually precise and defined among the states, and also different from other states.  First, courts look at whether causes are independent -- such as earthquake and a lightning strike, or windstorm and wood rot -- or dependent, such as when an earthquake breaks a gas main that starts a fire. 

If the causes are dependent, the efficient proximate cause doctrine is used to determine which cause set the others in motion.  If this cause is covered, the damage will be covered. If the causes are independent, courts use what they call a concurrent cause analysis -- as long as one cause is covered, the damage is covered. 

Anti-concurrent cause language is upheld in Florida, but in this case, the court said it didn't preclude coverage. The anti-concurrent cause language was not contained as a "lead-in" to exclusions as one normally sees, but from what I can determine by reading the case, the provision was embedded in the mold exclusion itself.  The exclusion was for bodily injury or property damage due in whole or in part to fungi or bacteria in or within a building, "regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage." 

The way the court analyzed this, the anti-concurrent cause language would apply only to truly concurrent causes -- those that are of independent origin. The allegations of the complaint, however, indicated dependent causes, according to the court: failure to install of vapor barrier set in motion mold growth, leading to damage to renters of property. Therefore, the court said, anti-concurrent cause language doesn't apply because the efficient proximate cause doctrine is used for dependent causes. Failure to install the vapor barrier, according to the court, was a covered cause and therefore the damage was covered.  The court also placed some significance on the fact the anti-concurrent cause language was embedded in the exclusion and was not a lead-in provision, although I fail to see why this would make a difference, and the court made no effort to explain this -- possibly because the explanation wouldn't make any sense. The significance of lead-in language is only that it applies to more than one exclusion.  One could just as well write anti-concurrent cause language into each exclusion, but it saves space to do it the other way. 

One glaring omission in the court's analysis -- what of the words "or in any sequence" in the anti-concurrent cause provision.  As those who have read my examinations of anti-concurrent cause language know, sequential damage is precisely what the court is talking about here: dependent causes that result in damage. The court gave no explanation for ignoring this policy language altogether.  Neither did the court attempt to figure out what the words meant, why they would be in the policy or what distinction was drawn with the words between concurrent and sequential damage.  The analysis could have been a lot better.

Full post as published by Insurance Coverage Law Blog on May 01, 2008 (boomark / email).