Florida's Concurrent Cause Doctrine: A Post-Hurricane Irma Refresher

September 19, 2017

Florida's Concurrent Cause Doctrine: A Post-Hurricane Irma Refresher

The Case:  Sebo v. American Home Assurance Co., Inc., 208 So.3d 694 (Fla. 2016).

Background: Sebo purchased a 5-year-old home in Naples, FL in 2005 and insured it with American Home (AHAC) under an “all risks” non-standard policy with an $8 million limit. Shortly after purchase, the home began experiencing water intrusion during rainstorms. After several months, it became clear that the house suffered from major design and construction defects. In October of 2005, Hurricane Wilma hit and further damaged the home. It could not be repaired and was eventually demolished. AHAC agreed to pay $50,000 in agreed coverage for mold, but denied the remainder of the claim.  

The issue on appeal was whether coverage existed under Sebo’s all-risk policy when multiple perils combined to create a loss, and at least one of the perils is excluded by the terms of the policy. This required the Florida Supreme Court to answer the fundamental question of whether, and when, to apply the efficient proximate cause (EPC) or concurrent cause (CCD) doctrines.

As a refresher, the EPC contemplates a chain of events where one peril independently and directly leads to a subsequent peril (think linear/chronological chain of events). If the first or initiating event is covered, then the loss is covered regardless of whether the subsequent events are not (and the inverse holds true). The CCD contemplates more than one cause happening at the same time and in concert to create the resulting damages. Under the CCD, an all-risk policy will typically cover the damage as long as one of the concurrent causes is covered, even even if the others are not. 

Holding: When independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine. 

In Sebo, it was undisputed that there was more than one cause that combined to result in the damage to the home–defective construction, rain, and wind. It was also undisputed that the Policy contained an exclusion for faulty, inadequate or defective planning, design, workmanship, construction, and the like, which was applicable under the circumstances. The Court found that there was no way to distinguish the proximate cause of Sebo’s property loss and that the rain and construction defects acted in concert. Further, the Court found that AHAC’s “faulty work” exclusion did not (as in other portions of the Policy) use language to explicitly avoid applying the CCD. Therefore, the Court held that the CCD applied under the facts and Policy wording and that the damage to Sebo’s home as covered although the defective construction was an excluded cause.

CommentarySebo re-affirms prior Florida law which recognizes both the EPC and CCD doctrines in first party property insurance. In doing so, it reminds us that coverage determinations will turn on both the specific facts of the claim (i.e. determining all causes of the damage) and the specific wording of the Policy (i.e. does the Policy explicitly avoid the CCD or not). If the causes are independent and occur in linear fashion, then coverage will turn on whether the first or precipitating cause, is covered. If the causes are not independent and acted in concert with each other, then the CCD may apply. If it does, coverage will turn on whether just one of those causes is covered.  Some common wording which may abrogate the CCD’s application is “regardless of whether it occurred, in whole or in part” and “regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.” Such wording has been found to avoid the CCD, for example, in the context of ISO standard mold exclusions.