When multiple events cause damage, is there coverage? If language in the policy addresses concurrent causes of loss, then that language usually answers the question. If the policy is ambiguous, then look to case law. This was recently discussed in Salem United Methodist Church of Cedar Rapids, Iowa v. Church Mutual Insurance Company.1
Through Church Mutual, Salem had property insurance, but not flood insurance. In 2008, a nearby river overflowed its banks and flooded the City of Cedar Rapids, Iowa. Salem suffered a sewer backup and filed a claim with Church Mutual. The claim was denied so Salem filed suit. The case recently went to trial and a jury found in favor of Salem. A special verdict form was used whereby jurors were asked to answer specific questions about the case.
The district court concluded “that if a covered peril combines with any other peril to cause the loss, there is coverage for the loss. The jury's answers do not require speculation on the part of the Court, and it is clear the jury's damages award was based on the combination of the two causes of [Salem's] loss.” Additionally, the court found “the issues of ambiguity and reasonable expectations are moot under these facts.” The court entered judgment for Salem for $705,765.07.
Church Mutual appealed the verdict. It first contended the policy clearly and unambiguously provides that there is no coverage for damages arising from concurrent causes when one of the causes is excluded. Second, Church Mutual contended that even if the anti-concurrent cause language is not given effect under these facts, the district court erred as the jury's answers to the special verdict are inconsistent.
The policy at issue contained an exclusion:
We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. .... 7. Water. a. Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not;....
It is clear that damage caused by a flood is excluded from coverage. There was also a provision that directly addressed coverage for sewers:
Subject to all other terms and conditions of this policy, we will pay for direct physical loss or damage to Covered Property caused by back up of water or sewage through sewers or drains only if caused by an event away from the described buildings and when the damage is not caused by flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not, and which did not enter the building through foundations, walls, floors, windows, cracks, roofs, or through other opening of the building.
Sewer or water damage occurring as a result of, either before or after, the excluded flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not, and entering the building through foundations, walls, floors, windows, cracks, roofs, or through other openings of the building is not covered.
The policy excluded coverage for damages that are concurrently caused by a covered cause—such as sewer back up—and an uncovered cause—such as flooding by its language, “Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”
“If an insurance policy and its exclusions are clear, the court will not write a new contract of insurance for the parties.”2 “Insurance coverage is a contractual matter and is ultimately based on policy provision.”3 However, the court looked to the Kalell case and found that “[I]f a covered peril combines with any other peril to cause the loss, there is coverage for the loss.”4 However, Kalell was incorrectly applied because the court further found that "[w]hen insurance policies lack ... an anticoncurrent-cause provision, ... an accident that has two independent causes, one of which is covered and one excluded, is covered unless the excluded cause is the sole proximate cause.”5 Kalell is distinguishable from the facts in Salem, so the policy language was misconstrued and if a flood is a concurrent cause of loss, there is no coverage.
The court then looked to the questions and answers on the Special Verdict form. In applying the law relative to concurrent causes, the court could not decide if the jurors’ answers were consistent with the law, so the case was remanded for a new trial.
This case spells out why our jobs are so very interesting. Sometimes even courts apply the law incorrectly, and sometimes you take a case to trial, get a nice verdict, then after appeal are saddled with trying the case again. In the case at hand, the wheels of justice turned slow as the loss was incurred in 2008 and it is still unresolved. Patience is a virtue, especially in cases like this one.