Fact-Finder to Apply Efficient Proximate Cause Doctrine with Multiple Perils with First Party Property Insurance Policy

With all-risk property insurance policies (first-party policies) involving multiple risks or perils, the finder of fact (jury) applies the efficient proximate cause doctrine to determine the cause of the loss. Under the efficient proximate cause doctrine, if the jury determines that the most substantial factor in the cause of the loss is a covered peril or risk under the policy, then there is coverage for the insured’s loss. If the jury determines that the most substantial factor in the cause of the loss is an excluded peril or risk under the policy, then there is no coverage for the insured’s loss. (Oftentimes a coverage dispute with an all-risk property insurance policy involves multiple perils where the insured claims the loss was caused by a covered peril and the insurer claims the loss was caused by an excluded peril.)

For example, homeowners had an all-risk property insurance policy that provided coverage, through an endorsement, for direct physical loss caused by a sinkhole. Homeowners argued that their property suffered damage because of a sinkhole (a covered peril). The insurers argued that the homeowner’s property damage was caused by problematic soil in a reclaimed mine zone which was excluded under the policy. In this case involving multiple perils (either the loss was caused by the covered sinkhole peril or the excluded soils peril), the fact-finder needed to apply the efficient proximate cause doctrine to determine whether the most substantial factor causing the property damage was the sinkhole (a covered peril meaning there would be coverage for the damage) or the problematic soil (an excluded peril meaning there would be no coverage for the damage). Citizens Property insurance Corp. v. Salkey, 41 Fla. L. Weekly D509a (Fla. 2d DCA 2016).

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.

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