Consumer activist J. Robert Hunter has called on insurance commissioners to repeal the clause that permits carriers to deny claims for covered losses if uncovered events take place at the same time.

The so-called anti-concurrent causation clause is used to override a damage claim from a covered cause such as wind when an uncovered event such as flood occurs in the same time period, said the current insurance director for the Consumer Federation of America and former Texas insurance commissioner.

“Consumers cannot be expected to understand how this clause works and will always be shocked to learn that their coverage has been trumped by the occurrence of some other type of claim,” Mr. Hunter wrote.

During Hurricane Katrina, some insurers used the clause to refuse to pay for wind losses on homes that also had experienced flood damage. “This was even if the flood occurred hours after the hurricane hit the home,” Mr. Hunter wrote.

Robert Detlefsen, National Association of Mutual Insurance Companies vice president for public policy, said the ACC clause was added to make clear that if any portion of a loss is caused by a noncovered peril, the loss would not be covered.

“Stripping anti-concurrent causation clauses from insurance contracts would prevent insurers from managing their exposures, forcing them to either raise rates or exit markets in jurisdictions where the ACC is disallowed,” Mr. Detlefsen said.

The NAMIC official said that most states allow the clause and most insurers use them. “Also, the language appears to be included in all relevant ISO policies,” he said. “If the clause was not accepted on a wide basis, ISO would not include it in their standard forms.”

NAIC officials and insurance commissioners had no comment.

Special Reports /

Hunter Attacks Anti-Concurrent Clause

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