After a hurricane strikes your business, the exact cause of the damage is probably the furthest thing from your mind. However, many commercial insurance providers are unwilling to pay for damage resulting from multiple causes of loss, especially if some perils are covered and some are not. Attorney Bill Voss explores the doctrine of concurrent causation and how to get the coverage you are entitled to after a combination of perils damage your property.
Concurrent Causation Can Quickly Complicate a Hurricane Claim
Concurrent causation is the legal term for when damage is the result of two or more causes, but one (or more) causes are not covered by the policy. The damage-causing events can occur at the same time or in succession, but generally occur due to one overarching event (such as a storm or natural disaster). For example, high winds may send objects flying and break windows, allowing rain to enter the structure and cause water damage.
State courts differ on whether or not to provide full payment for multiple causes of loss in concurrent causation cases. In the past, Texas courts have held that policyholders are entitled to recover only that portion of the damage caused solely by a covered peril. However, there are often disputes about which peril caused the damage. Depending on the details of the claim, a policyholder may collect payment for the covered portion of damage only, the covered and non-covered damages, or the claim may be denied (if the loss is determined to be caused primarily by the non-covered event).
The best way to protect against concurrent causation disputes is to:
- Determine if the policy has an anti-concurrent causation clause. Some insurers include anti-concurrent causation wording directly in the policy, stating that any loss caused by certain listed perils will be excluded. The Texas Supreme Court has upheld the enforceability of anti-concurrent clauses, so it is unlikely that policyholders will be able to collect coverage if their policies include this language.
- Identify the cause of damage. The burden of allocating damage between covered and non-covered perils falls on you, the policyholder. Unfortunately, it can be difficult to pinpoint the exact cause of damage after a large loss, especially if the property is flooded or inaccessible. A thorough investigation of the damage may be able to determine which perils led to which damages, especially if the inspection uses a timeline of the events and weather patterns moving through the area. An insurance claim attorney can gather the evidence you need to prove the extent and cause of your losses, and can also challenge the insurer’s assumptions as to each cause.
- Purchase multiple policies. Commercial insurers typically exclude coverage for wind damage and flooding caused by natural disasters. By purchasing a policy through the National Flood Insurance Program (NFIP) as well as a separate windstorm policy from the Texas Windstorm Insurance Association (TWIA), you should be able to collect coverage for both events.
- Compare coverage differences among disaster victims. Although coverage is applied based on the facts of each claim, adjusters will often deny claims at a higher rate after a disaster to avoid major losses to the insurer. Denying whole claims, partial claims, or treating two similar claims differently can show bad faith on the part of the insurance company, entitling the policyholder to even more money in compensation. Your attorney can investigate your insurer’s rate of paying claims, applying coverage consistently after a disaster, and other inconsistencies in adjustment practices that could be used in your favor.
If you are struggling to recover after a hurricane, our attorneys can work to get full and fair payment from your commercial insurance carrier. Simply fill out the form on this page today to contact an insurance attorney at the Voss Law Firm or order a free copy of our book, Commercial Property Owners Must Read This BEFORE Filing an Insurance Claim.