I previously discussed the application of the efficient proximate cause doctrine with all-risk property insurance policies. Under the efficient proximate cause doctrine, the finder of fact must determine which risk or peril was the most substantial factor / the efficient proximate cause of the loss. If the most substantial factor in causing the loss was a covered risk or peril under the policy, there is coverage; if the most substantial factor in causing the loss was risk or peril not covered under the policy, there is no coverage.
“Under the efficient proximate cause rule, the plaintiff must also prove that the covered loss was the ‘most substantial or responsible’ cause of the loss. The burden then shifts to the insurer to prove that the efficient proximate cause of the loss is excepted or excluded.” Peek v. American Integrity Insurance Co. of Florida, 40 Fla. L. Weekly D2199c (Fla. 2d DCA 2015).
Here is another example. Homeowners moved into home with Chinese Drywall. Homeowners contended that after they moved into the home there was a noxious sulfur odor and copper coils in their air conditioning system started to corrode. Homeowners had an all-risk property insurance policy. Policy excluded latent defects, corrosion and pollutants. Policy did not exclude humidity. Homeowners argued that if humidity was the most substantial factor (or the efficient proximate cause) in causing the loss, there is coverage since humidity was a covered peril. Conversely, if the most substantial factor (or the efficient proximate cause) was the Chinese drywall itself, there is no coverage based on the aforementioned exclusions. Based on the evidence presented at trial, the trial court granted a directed verdict since the homeowners did not prove that humidity was the substantial factor (or the efficient proximate cause) in the loss. See Peek, supra.
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