First Party Claims Conference West is ongoing. One of California’s top property insurance attorneys, Joel Gumbiner, discusses the topic of causation and concurrent causation in California.
California insurance law is unique because it has statutory law in Code 530, which sets the standard for causation:
An insurer is liable for a loss of which a peril insured against was the proximate cause, even though a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for an injury of which the insured peril was only a remote cause.
My research of case law interpreting this statute turns up hundreds of cases debating whether a cause of loss is covered, but here are some examples of cases in California in the context of an all-perils policy:
Under “all risk”
; property insurance, it is the effective proximate cause, i.ethe dominant cause of the loss, which determines coverage under California law. Malkin v. Federal Insurance Company, (CDCal. 2022), 562 F.Supp.3d 854.Under all-peril or open-peril insurance for tenements, if the loss was caused by a combination of covered and excluded perils, the loss was covered if the principal or dominant cause was a covered peril. Vardanyan v. AMCO Ins. Co. (App. 5 Dist. 2015) 197 Cal.Rptr.3d 195, 243 Cal.App.4th 779, review denied.
In an “all-risk” homeowner’s policy, the policy covers all risks except those specifically excluded or excluded, while in a “specified risk” policy, only the risks specifically mentioned are covered. Freedman v. State Farm Ins. Co. (App. 2 Dist. 2009) 93 Cal.Rptr.3d 296, 173 Cal.App.4th 957, review denied.
The all-risk builder’s risk policy for flood control projects provided coverage for flood damage on projects where flood contributed to or aggravated loss, even if excluded construction defects were found to be effective proximate cause of the loss, where policy endorsement provided coverage for loss “caused by, contributed to or aggravated by flood.” Mission National Ins. Co. v. Coachella Valley Water Dist. (App. 4 Dist. 1989) 258 Cal.Rptr. 639, 210 Cal.App.3d 484, review denied.
In determining whether coverage exists under an “all-perils” homeowner’s policy when loss to the insured’s property is attributable to two causes, one of which is a non-excluded peril and the other an excluded peril, courts shall find coverage only if it does not is excluded. peril is the effective proximate cause of the loss, rather than finding coverage whenever a non-excluded peril is a contemporaneous proximate cause of the loss. Garvey v. State Farm Fire & Casualty Co. (1989) 257 Cal.Rptr. 292, 48 Cal.3d 395, 770 P.2d 704.
The question of whether included risk of negligent construction or excluded risk of earth movement was the effective proximate cause of the homeowner’s addition moving away from the main structure was for the jury in action deciding coverage under the “all-risk” homeowner’s policy. Garvey v. State Farm Fire & Casualty Co. (1989) 257 Cal.Rptr. 292, 48 Cal.3d 395, 770 P.2d 704.
Gumbiner noted how mudslides following wildfires resulted in the California Insurance Commissioner sending a formal notice to insurers in 2018 reminding them that the fires were the “predominant” cause of the mudslides and that coverage should be paid. I’m not sure other states with different jurisprudence would get coverage.
I found Gumbiner’s discussion of multiple events fascinating. When faced with these types of losses, I first remind people to read the policy to see if there is a definition of occurrence. When multiple thefts occur, these cases are often battles over deductibles – are the thefts the result of a common scheme and therefore one event or separate events? If it is considered separate, the deductible must be considered each time.
Part of the point of this blog is to encourage attendance at conferences with great teachers and knowledgeable participants, such as the First Party Claims Conference. Education makes us all better when we study and discuss damage situations in different parts of the country.
Today’s thought
Those who use “Correlation is not the same as causation” as a magic spell to dismiss all fact-using professions are fools holding a lighted match in one hand and an open gas can in the other and shouting, “You have nothing to do with the other !’
—David Brin
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