AN INSURANCE POLICY ISN’T AMBIGUOUS JUST BECAUSE YOU WANT IT TO BE

Posted on December 5, 2021December 5, 2021 by Edward Garber

When it comes to insurance contracts, there is a rule of law that states, “where interpretation is required by ambiguity in insurance contracts[,] the insured will be favored.” Pride Clean Restoration, Inc. v. Certain Underwriters at Lloyd’s of London, 46 Fla. L. Weekly D2584a (Fla. 3d DCA 2021) (citation and quotation omitted). Stated another way: ambiguities in insurance contracts will be interpreted in favor of the insured and against the insurer.

With this rule of law in mind, insureds oftentimes try to argue ambiguity even when there is not one. This was the situation in Pride Clean Construction. In this case, the property insurance policy contained a mold exclusion that stated the policy did NOT insure for “a. loss caused by mold, mildew, fungus, spores or other microorganism of any type, nature, or description including but not limited to any substance whose presence poses an actual or potential threat to human health; or b. the cost or expense of monitoring, testing, removal, encapsulation, abatement, treatment or handling of mold, mildew, fungus, spores or other microorganism as referred to in a) above.” Not only did the policy not insure for loss caused by mold, it went further to state it was NOT insuring for any mold testing or abatement.

In this case, the insured sustained hurricane-related damage. This damage included mold remediation services. The insured (that assigned her benefits under the policy to the mold remediator) argued the policy was ambiguous because it does not identify whether it covers a covered loss that causes mold. In making this argument, the insured relied on Florida’s Supreme Court case, Sebo v. American Home Assurance Co., Inc., 208 So.3d 694 (Fla. 2016), that adopted what is known as the “concurrent cause doctrine,” holding: “[T]hat when independent perils converge and no single cause can be considered the sole or proximate cause [of the loss], it is appropriate to apply the concurring cause doctrine.” – “[T]he concurrent cause doctrine provides that coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or efficient cause [of the loss].” Pride Clean Construction, supra (internal quotations and citation omitted).

Here, however, there was no reason to apply the concurrent cause doctrine to determine the cause of the loss and whether the loss was caused by mold [excluded] or a hurricane [covered], because the policy contained a blanket exclusion that excluded “the cost or expense of monitoring, testing, removal, encapsulation, abatement, treatment or handling of mold.” Mold remediation was blanketly excluded; hence, the cause of the mold was irrelevant for purposes of the policy covering mold remediation-type costs.

This brings up an important consideration. Read your policy and understand what is covered and what is not covered. If there is a concern regarding mold or mold remediation, you need to understand your rights as to whether there is a policy that can meet your insurance needs even if the policy includes a certain sub-limit to provide some coverage. But you can extend this beyond mold because blanket exclusions will automatically exclude certain coverage and you want to make sure you have an understanding as to what is excluded – no matter what – to ensure your rights are sufficiently insured!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

BURDEN OF PROOF UNDER ALL-RISK PROPERTY INSURANCE POLICY

Posted on January 22, 2018January 22, 2018 by Edward Garber

A recent Florida case, Jones v. Federated National Ins. Co., 43 Fla. L. Weekly D164a (Fla. 4^th DCA 2018) discusses the burden of proof of an insured in establishing coverage under an all-risk property insurance policy. Getting right to this critical point, the court explained the burden of proof as follows:

1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.

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2. If the insured’s initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss.

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3. If the insurer meets the burden of proof under either 2.(a) or 2.(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If the insurer does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.

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4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage. If it fails to satisfy this burden of production, judgment shall be entered in favor of the insured.

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5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue. If the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer.

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6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured’s purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

Jones, supra.

In this case, the insured suffered roof damage and claimed it was the result of a hailstorm, a peril covered under the policy. The property insurer denied coverage contending the roof damage was not covered under the policy due to certain exclusions including, without limitation: (i) wear and tear, (ii) faulty or defective design, and (iii) existing damage. The homeowner argued that the concurrent cause doctrine should apply to determine if there was coverage under this all-risk property insurance policy. (Check out this article for more on the concurrent cause doctrine.) This doctrine holds that insurance coverage may exist if an excluded peril and covered peril concurrently cause a loss. The trial court did not apply this doctrine; rather, it applied the doctrine known as the efficient proximate cause doctrine which holds that if there are concurrent causes for a loss, the peril that set the other peril in motion is the peril that the loss is attributable to, i.e., you are looking at the most responsible cause of the loss. Thus, if an excluded peril set a covered peril in motion, i.e., it is the most responsible cause of the loss, the loss would be attributable to the excluded peril and not covered by the policy.

The court, relying on a Florida Supreme Court decision, maintained that it was error to instruct the jury on the efficient proximate cause doctrine without the jury first determining whether an efficient proximate cause of the loss could be determined. If it could not be determined, the concurrent cause doctrine would apply and the jury would determine if one of the concurrent causes (perils) was covered under the policy. For instance, if the jury could not determine whether one peril set another peril in motion, the jury would determine whether the hailstorm concurrently caused the roof damage with another peril (e.g., defective design); and, if so, whether the hailstorm is a covered peril such that the roof damage would be covered under the policy.

Notably, the court noted that certain exclusions the insurer relied on contain anti-concurrent cause language, which negates the application of the concurrent cause doctrine. However, since some of the exclusions the insurer relied on did not specifically incorporate anti-concurrent cause language, the jury could have found that the hailstorm concurrently caused the roof damage with an exclusion that did not contain the anti-concurrent cause language meaning the concurrent cause doctrine would apply.

I know this is confusing. I agree, it very well can be confusing. Nonetheless, what this emphasizes is the importance of strategy when it comes to presenting a property insurance claim to trigger the application of the concurrent cause doctrine and preparing jury instructions, which is the law you want the jury to follow. This also emphasizes the importance of the verdict form which is the form the jury fills out to decide the outcome of the case.

BENEFIT TO INSURED UNDER PROPERTY INSURANCE POLICY – CONCURRENT CAUSE DOCTRINE

Posted on December 2, 2016December 2, 2016 by Edward Garber

The Florida Supreme Court in Sebo v. American Home Assurance Co., Inc., 41 Fla. L. Weekly S582a (Fla. 2016) gave really good news to claimants seeking recovery under a first-party all-risk property insurance policy. The Court held that the concurrent cause doctrine and not the efficient proximate cause doctrine was the proper theory of recovery to apply when multiple perils—an excluded peril and a covered peril-combined to create a property loss. (The facts of this case can be located here.)

In this case, there really was not a dispute that defective construction (an excluded peril) and rain and wind (covered perils) combined to create the asserted property loss. The issue was whether the loss should be covered when both an excluded peril combines with a covered peril to cause the loss.

There are two different trigger theories to determine whether coverage applies.

The first is the efficient proximate cause doctrine which states that when there are concurrent perils that caused a loss, the peril which set the other peril in motion (the primary peril) is the peril to which the loss is attributable. So, if the primary peril is an excluded peril, there is no coverage.

The second is the concurrent cause doctrine which states that when concurrent perils cause a loss there is coverage, even when one of the perils is an excluded peril. This is a much more favorable doctrine to an insured!

Here, there was no reasonable way to determine the efficient proximate cause of the loss since the facts reveals that rain and wind combined with defective construction to cause the loss. For this reason, the Supreme Court held that concurrent cause doctrine applied meaning there was coverage even though defective construction was an excluded peril.

If you have a first-party property insurance claim, make sure to utilize the services of counsel that maximizes your ability to argue coverage under the policy.