Concurrent Causation: History of the Concurrent Causation Theory

substantially lower than the cost of insuring all of the various perils separately.

Next came a broad perils endorsement, which added vandalism and various other perils. Then, finally, following the lead of Marine underwriters, insurers began to offer “all risks” insurance, which, instead of covering only perils named in the policy, covered any physical loss or damage to property not specifically excluded.

Along with such items as wear and tear, rust, corrosion, fungus, decay, deterioration, and other naturally occurring and generally considered uninsurable damage, two of the major perils commonly excluded were earth movement (including earthquake) and flood (which usually also included various other kinds of water damage), which were clearly spelled out in the exclusionary language of these policies.

This was a satisfactory arrangement for both insurers and insurance buyers. Earthquake and flood insurance could be purchased separately, the latter usually through the Federal Flood Insurance Program or, to a limited extent, through the surplus lines market.

Concurrent Causation Coverage
In 1982 and 1983 two court cases in California, which involved a concept known as “concurrent causation,” produced a drastic change in underwriters´ thinking about all risks coverage. The first case, Safeco Insurance Co. v. Guyton, 692 F.2d 551 (1982), found the insurer liable for flood damage under an all risks homeowners´ policy, notwithstanding its flood exclusion, because of the failure of a third party resulting in the flood which damaged the insured’s property. The

theory was that negligent maintenance of the flood control structures was not an excluded peril so, using the concept of concurrent causation, the covered (not excluded) peril took precedence over the excluded peril, to allow coverage.

Similarly, in Premier Insurance Co. v. Welch, 140 Cal. App. 3d 720 (1983), a homeowner’s all risks policy was found to cover landslide damage to the insured’s home,

notwithstanding the earth movement exclusion, because faulty installation of a drain by a third party, not excluded, was held to be a concurrent cause of the loss.

Concurrent Causation Exclusions
In response to these two claims, the Insurance Services Office (ISO) quickly drafted revised exclusions for their all risks policies and also, believing that the term “all risks”