Many homeowners’ insurance policies have an anti-concurrent causation (ACC) clause. This single clause can play a crucial role in the insurance claims process.
For some homeowners, this simple clause has been the difference between a $100,000 payout and a $0 settlement.
Today, we’re explaining everything you need to know about the anti-concurrent causation clause, including how the clause works and what it means when you have an insurance claim.
What is Concurrent Causation?
Concurrent causation is a method of handling losses or damages that occur from more than one cause.
If a windstorm and flood hit your home at the same time and cause damage, for example, then this is concurrent causation: the two events have damaged your property at roughly the same time.
In insurance, concurrent causation occurs when a property experiences a loss from two separate causes. Issues arise when one cause is covered by your insurance policy and the other is not. Your policy may cover windstorm damage but not flood damage, for example.
Depending on your situation, damages from both causes are likely to be covered if your insurance policy has a concurrent causation clause.
Damages will not be covered, however, if you have an anti-concurrent causation clause.
How Does Concurrent Causation Work For Insurance Claims?
A concurrent causation loss occurs when two separate things damaged your property at roughly the same time.
The two events may have occurred simultaneously. Or, they might have occurred one after the other.
Let’s say a tropical storm hits your home. Strong winds damage your roof, while heavy rains cause flooding throughout your neighborhood. Your front door is blown open by the strong winds, and flood waters leak into your home.
In this situation, it may not be possible to separate the damage caused by the flood from the damage caused by the tropical storm. It’s all mixed together.
However, your homeowners’ insurance policy covers damage from wind (like the tropical storm) but excludes damage from flooding.
With a concurrent causation clause, the insurance company will be required to pay damages to the policyholder – even though one type of loss was excluded.
Under anti-concurrent causation, the insurance company would not be required to pay any damages – even though one type of loss was covered.
Concurrent causation traces its history back to California courtrooms in the 1970s and ’80s. These courts ruled that claims for damages from concurrent events were valid. If a covered hazard (a windstorm blowing open your door or tearing off your roof) increased the damage from an excluded risk (the flood damage), the entire loss would be claimable by the policyholder.
We’ve seen similar rulings with earthquake insurance claims. Most homeowners’ insurance policies do not cover earthquakes. However, if an earthquake shakes your home, destroys your foundation, and causes a gas line to break and start a fire, then your insurer may be required to cover these damages.
We also hear about anti-concurrent causation clauses every time a hurricane strikes the United States. Many homeowners have had their homes destroyed by hurricane-force winds (which should be covered), but their homes were also damaged by flooding (which is not covered). Because of anti-concurrent causation clauses, homeowners may not receive any compensation for their claims.
What is an Anti-Concurrent Causation Clause?
Today, most homeowners’ insurance policies contain anti-concurrent causation (ACC) provisions.
Anti-concurrent causation provisions arose because insurance companies disagreed with the rulings such as those from California that started in the 1970s and 80s. Insurance companies disliked the idea that they could be liable for more damages. It increased their costs and liabilities.
In response to these rulings in the 1980s, insurance companies gradually started adding anti-concurrent causation clauses to contracts.
The anti-concurrent causation clause excludes damage from covered perils even if a second, covered peril contributed to the damages. The exclusion also applies when two covered events happen at the same time or in a sequence.
Many insurance policies use anti-concurrent causation clauses to limit their liability in certain extreme situations. Many property insurance policies, for example, apply anti-concurrent causation language to specific exclusions like law and ordinance, earth movement, government action, nuclear hazards, utility services, water, flooding, or fungus and mold.
How Do Anti-Concurrent Causation Clauses Work?
An Anti-Concurrent Causation Clause in an insurance policy can have significant impacts when you have an insurance claim for property damage – it can cause an entire claim to be denied for coverage. A typical anti-concurrent causation clause contains language like this:
“The loss will be excluded whether or not any other cause or event contributes concurrently or in any sequence to the loss.”
The anti-concurrent causation clause is typically included as part of a small number of exclusions – including water damage, earthquakes (‘earth movement’), nuclear hazards, and other extreme exclusions.
Many homeowners’ insurance policies are “all-risk” or “open perils” policies, which means direct physical losses are covered unless excluded or limited. The insurance policy may cover all direct physical losses to your home except for losses caused by flooding or earthquakes, for example.
On all-risk policies, an insurance company may use an anti-concurrent causation provision to reduce its liability if you have an insurance claim.
Are Anti-Concurrent Causation Clauses Enforceable in All States?
The vast majority of jurisdictions enforce anti-concurrent causation language in property policies under the basis of freedom of contract: policyholders and insurers have entered a contract, and both parties have agreed to follow the terms of that contract.
ACC clauses have held up in court in some states but not others.
States That Do Not Enforce Anti-Concurrent Causation Clauses
Some states have determined that insurers cannot contract around the jurisdiction’s public policy interest in enforcing the proximate cause rule. Thus, anti-concurrent causation clauses are not valid in all states.
Specifically, four states have ruled that they will not enforce anti-concurrent causation clauses:
- North Dakota
- West Virginia
An insurance company may try to argue that it is not liable for damages because of the anti-concurrent causation clause in the policy.
A court may rule, meanwhile, that the covered peril was the proximate or predominant cause of the loss, in which case the damage should be covered.
In most states, the court will side with the insurer based on the principle of freedom of contract. In the four states above, however, courts will not enforce anti-causation clauses.
States that Have Validated ACC Clauses
In most other states, ACC clauses have been validated in court. Here are the states that have specifically validated anti-concurrent causation clauses:
- North Carolina
- New Hampshire
- New Jersey
- New York
- South Carolina
- South Dakota
However, even in states that have validated ACC clauses, there may be some disagreement with how the law is applied.
After Hurricane Katrina in Mississippi, for example, federal and state courts disagreed on how insurance companies would cover damages and deal with ACC provisions.
Federal courts argued that ACC clauses prevent coverage even when a covered peril (like the wind of the hurricane) contributed concurrently or in any sequence to cause the loss by an excluded peril (flooding). Mississippi state courts, meanwhile, found that ACC clauses were inapplicable where an excluded peril (flooding) followed a covered peril (wind damage) and combined to cause an indivisible loss.
Determining the ‘Proximate Cause’ of Your Damage
The best way to fight back against anti-concurrent causation clauses is to argue that the proximate (predominant) cause of your loss should be covered.
If your home is damaged by wind and mold after a storm, for example, then you would argue that most of the damage was caused by wind – not mold.
If the proximate cause of your loss is deemed to be mold – not wind – then your loss will be excluded and your claim will be denied.
If the proximate cause of your loss is deemed to be wind instead of mold, then your loss will be included and your claim should be approved.
For Help With Concurrent Causation Situations, Talk To A Public Adjuster
Anti-concurrent causation clauses are controversial. Insurance companies across the United States have attempted to use anti-concurrent causation clauses to deny coverage on insurance claims.
ACC clauses have been validated in some jurisdictions but not others. Additionally, ACC clauses may be applied in certain situations but not others.
Anti-concurrent causation clause situations can get complicated. If you feel your insurance company has wrongfully denied your claim by applying its ACC clause, or if you’re disappointed in the treatment by your insurance company, then it’s in your best interest to talk to a Public Adjuster.
Contact ClaimsMate today to setup a free consultation with an experienced Public Adjuster that can help in dealing with claims involving anti-concurrent causation clauses.