In an important decision for Florida homeowners, the Supreme Court of Florida recently held that a homeowner was entitled to full insurance coverage for damage caused by a combination of covered and non-covered perils. The Court reached this decision even though the non-covered peril – a construction defect – was expressly excluded under the plain language of the homeowner’s policy.
Insurance Coverage and Concurrent Causes
In Florida, there are two different rules that can potentially apply to insurance claims involving concurrent causes (where one cause is covered and the other is not). These rules are known as “efficient proximate cause” and the “concurrent cause doctrine.”
Under the rule of efficient proximate cause, “where there is a concurrence of different perils, the efficient cause—the one that set the other in motion—is the cause to which the loss is attributable.” So, for example, if a building fire leads to an explosion, losses resulting from the explosion would be covered even if explosions are excluded under the owner’s policy. If, on the other hand, a non-covered loss leads to a covered loss, the policyholder is not entitled to payment.
Under the concurrent cause doctrine, “coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or efficient cause.” In other words, if multiple issues lead to a loss and neither issue directly causes the other, the policyholder is entitled to coverage for the entire loss even if one of the causes is an excluded peril.
Policyholder Entitled to Coverage Despite Policy Exclusion
In this case, it was clear that the homeowner’s policy excluded coverage for damage resulting from construction defects. That was not in dispute. It was also not in dispute that, “there was more than one cause of the [homeowner’s] loss, including defective construction, rain, and wind.” However, while the homeowner asserted that the entire loss should be covered under the concurrent cause doctrine, his insurance company argued that the acknowledged role of the construction defect should prevent coverage under the policy’s defect exclusion.
The Supreme Court of Florida sided with the homeowner.
Finding that, “the rain and construction defects acted in concert to create the destruction,” the Court applied the concurrent cause doctrine. It also noted that the insurance company could have included language in the policy that would have prevented application of the doctrine but chose not do so.
In fact, while other provisions of the policy addressed the issue, the construction defect exclusion did not. As a result, the Court quashed the lower court’s ruling in favor of the insurance company and remanded the case for further proceedings.
Are You Facing an Insurance Coverage Dispute in Florida?
Saavedra | Goodwin is a Fort Lauderdale insurance claim law firm that represents insured property owners throughout South Florida. If you are facing a dispute with your insurance company, we can help. To get started with a confidential initial consultation, please call (954) 928-9568 or request an appointment online today.