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By Jennifer L. Gibbs
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As bands of heavy rain from Hurricane Harvey move toward southwest Louisiana, damage from wind, rain and flooding is likely to affect the already storm-weary Pelican State. Anticipated damage is expected to fall into three categories:

1. Damage caused exclusively by wind and wind-driven rain;
2. Damage caused by flood; and
3. Damage caused by both wind and wind-driven rain and flood.

Louisiana insureds are likely to seek coverage for all three categories of damage under property insurance policies. Under most policies, damage caused exclusively by wind or wind-driven rain is clearly recoverable. Similarly, if the policy excludes or sublimits flood damage, damage caused exclusively by flood should be excluded or sublimited. Thus, Louisiana courts (and insurers) often apportion between wind damage and flood damage. To the extent that the same damage is arguably caused by both flood and wind or wind-driven rain, however, coverage depends on the particular facts and policy language.

What is Concurrent Causation?

When courts address causation for first party insurance law purposes, the focus is on the peril that caused the loss. Complexities arise when losses occur from a combination of perils; such as when concurrent and/or sequential perils, one covered and one excluded, combine to cause a single loss to insured property. Under those conditions, the legally responsible cause of loss to insured property is identified under two distinctly different doctrines: “efficient proximate cause” or “concurrent causation."

Louisiana, like many jurisdictions, employs the “efficient proximate cause” doctrine. Under the “efficient proximate cause” test, an insured is entitled to recover for losses caused by an excluded peril if the covered peril is found to be the dominant cause of the loss. The efficient proximate cause doctrine, however, can result in extensive litigation between the parties to determine the dominant cause of the loss.[1] 

Under the doctrine of concurrent causation, where covered and noncovered perils combine to cause a loss, the insured is entitled to recover only that portion of the damage caused solely by the covered peril. The doctrine of concurrent causation is not an affirmative defense or an avoidance issue; rather, it is a rule embodying the basic principle that insureds are not entitled to recover under their insurance policies unless they prove their damage is covered by the policy.

Anti-Concurrent Causation Clauses

To avoid the issues associated with both the efficient proximate cause doctrine and the concurrent causation doctrine, insurers commonly include anti-concurrent causation language in property insurance policies. To that end, an example of common anti-concurrent cause exclusionary language in a homeowner's policy is as follows: 

We do not cover loss to any property resulting directly or indirectly from any of the following. Such a loss is excluded even if another peril or event contributed concurrently or in any sequence to cause the loss.

(1) [F]lood, surface water, waves, tidal waves, overflow of body of water, spray from these, whether or not driven by wind.

Similarly, typical anti-concurrent cause exclusionary language in a commercial property policy provides:

We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

... g. Water

(1) Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not; ...

Burden of Proof

Under Louisiana law, the insured has the burden to prove that the claim asserted is covered by the policy.[2] If the insured meets this burden, the insurer then has the burden to prove that the damage at issue is excluded from coverage.

To that end, with regard to damage likely to have been sustained during Hurricane Harvey, if the insured is able to prove that their property sustained damage from wind and rain, the burden shifts to the insurance carrier to prove that flooding also caused, concurrently or in any sequence, the damage at issue. If the carrier is able to establish that the excluded peril contributed to cause the same damage (an “indivisible” loss), the loss will likely be excluded by the anti-concurrent causation wording.[3] However, if the insurer is unable to meet its burden (or the evidence is found to be insufficient) the anti-concurrent causation wording likely will not preclude coverage.

For example, in Arcement v. GeoVera Specialty Insurance Servs. Inc.,[4] Tracey and Lori Arcement sought coverage under their homeowner's insurance policy for damages their property allegedly suffered during Hurricane Isaac. The policy issued by GeoVera excluded coverage for flood and included an anti-concurrent causation clause applicable to all exclusions, which provided:

“We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”[5]

The Arcements were insured under a separate stand-alone flood policy, but sought coverage from GeoVera for wind and rain damage. After finding through eyewitness and expert testimony that the Arcements had met their burden to show that their property sustained damage due to wind and rain, the court examined whether GeoVera met its burden to show that the Arcements’ damages were also caused concurrently or in any sequence by flooding.

The court noted that although GeoVera's witnesses all testified that the property was primarily damaged by flooding, Clark, GeoVera’s engineering expert, stated that multiple areas of the home would have been damaged by pre-flooding wind and rain. The court further noted that the flood adjuster, Christopher Stratton, testified that the home could have sustained substantial pre-flooding wind and rain damage. The court thus found that the jury had sufficient evidence to find in favor of coverage for the Arcements.[6]

Practical Takeaways

As with most first-party insurance claims, claims involving concurrent or sequential causes of loss are subject to established claims handling and settlement requirements under Louisiana law, including bad faith statutes. Thus, the insurer and its adjusters should be proactive and thorough in the investigation of the claim — retaining and employing engineers and other professionals as appropriate, and thoroughly documenting the damage with photographs and/or video. Moreover, carriers should affirmatively raise applicable policy defenses and, if necessary, issue a reservation of rights under the policy when coverage issues arise and/or if it appears that a coverage dispute is likely to result in litigation.

Jennifer L. Gibbs is a partner with Zelle LLP in Dallas.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Stewart Enterprises Inc. v. RSUI Indem. Co., 614 F.3d 117, 126 (5th Cir. 2010).

[2] Dickerson v. Lexington Insurance Co., 556 F.3d 290, 295 (5th Cir.2009).

[3] See, e.g., Tuepker v. State Farm Fire & Insurance Co., 507 F.3d 346, 354 (5th Cir. 2007).

[4] No. CIV.A. 13-5436, 2015 WL 151325, at *6 (E.D. La. Jan. 12, 2015). The Arcement case also highlights a split of authority regarding the application of concurrent causation clauses for which the La. Supreme Court has not provided definitive guidance. At least one Louisiana court, for example, has elected to follow the interpretation of the Mississippi Supreme Court that an anti-concurrent causation clause cannot “operate to remove from coverage, damages that would have otherwise been covered as a result of the initially covered loss.” See Orleans Parish School Bd. v. Lexington Insurance, 123 So.3d 787 (La. App. 2013) (citing Corban v. U.S. Automobile Ass’n, 20 So.3d 601) (Miss. 2009).

[5] Id. at *1.

[6] Id. at *8.