I have a customer with a concurrent cause of loss. I've attached the coverage letter from the carrier which has all the proper language with it. My insured is of the position that since she was able to open her business quickly through the delivery of water, she has proven that she can keep her business running despite the loss of water. Therefore, the concurrent causation language should not apply and she should be paid for the time her business couldn't open because of damage due to the loss of electricity. While I understand the theory, I can't find any policy language or case law that supports that theory in order to get coverage. Do you see any way around the concurrent causation language here?
Additional information: the insured lost power because of loss of electricity during a storm. There is coverage for that loss. There was also an impact to the water in the city, caused by flood, which is not covered. For 4 days, the insured couldn’t open at all, but on the 5th day, she was able to get water trucked into the premises. With the water delivery, she was able to open even though for 5 more days there was no electricity. She had generators.
Her argument is that since she showed she could run her business without the excluded loss (utility interruption due to flood) then she thinks concurrent causation shouldn’t exclude her coverage at all since electric utility interruption is covered. Frankly, I have no idea why the concurrent exclusions would or wouldn’t apply. That’s why I’m reaching out. In 30 years, I’ve never had this argument used on a claim.
Maine Subscriber
The following is the portion of the carrier's denial that pertains to this portion of the claim:
... The policy provides coverage for loss caused by utility interruption arising out of damage to the listed utility services caused by a covered cause of loss. We requested that you submit documentation to establish the cause of the utility interruption. We have also performed an independent investigation including reviewing the website, Water Services Recovery – The City of Asheville. While the documents supplied and results of our investigation do not establish the exact cause of loss that resulted in the utility interruption or the specific utility property that was damaged; however, the supplied City of Ashville water resource letter indicates that the damage was caused by a combination of flooding, landslides, debris and wind. Because the causes of loss listed include flooding and landslide, we are unable to extend any coverage under this provision of the policy and must deny this portion of your claim. The FM101 policy form contains the following exclusionary language that appears applicable to this matter and serves to bar coverage (we refer you to your complete policy and cite limited portions below in support of our current position): ...
The policy has the standard anticoncurrent causation language: (1) We will not pay for "loss" caused directly or indirectly by any of the following, unless otherwise provided. Such "loss" is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the "loss".
As such, given actual loss that is determined to be from a specific cause of loss that would be excluded, that cause of loss, in this case, flooding, would be excluded. However, since they say they don't know exactly what caused the outage, with some causes being covered and others excluded, then the insured should get the benefit of the doubt. In assessing policy language for coverage, exclusions are to be read narrowly and coverage applied in favor of the insured whenever there is a question. Since other damages from the event were covered on the basis of wind damage as a covered cause of loss, that cause of loss should also be applied to the utility interruption claim and thus coverage should be provided to the insured on that basis, unless they can show that flood was the specific cause of loss to the utility outage.