In its recent decision in Tuepker v. State Farm, the Fifth Circuit Court of Appeals held that State Farm's anti-concurrent causation clause is unambiguous and should be enforced under Mississippi law. In doing so, it reversed the lower court’s holding to the extent that the lower court determined that State Farm's anti-concurrent cause language was ambiguous. Click here to read the Fifth Circuit’s decision, which was based on the interpretation of Mississippi law.
Anti-concurrent-causation clauses ("ACC") generally provide that if a loss arises from a combination of covered and non-covered perils, the entirety of the loss is excluded from coverage. In relying on its decision in Leonard v. Nationwide Mutual Insurance Company (click here and here for previous posts about Leonard), the Fifth Circuit explained that the ACC clearly states that "excluded losses … will not be covered even if a nonexcluded event or peril acts 'concurrently or in any sequence' with the excluded event to cause the loss in question."
The Fifth Circuit also reversed that portion of the lower court’s decision that found the ACC clause to be invalid to the extent that it conflicts with the efficient proximate cause doctrine. In reaching this portion of the Fifth Circuit’s decision, the court relied on its holding in Leonard that the ACC clause circumvents the efficient proximate cause doctrine. Under the efficient proximate cause doctrine, which the court notes is the "default causation rule in Mississippi," when a loss is caused by both a covered and non-covered peril, if the covered risk "proximately caused the loss," the loss would be fully covered.
In addition, the Fifth Circuit upheld that portion of the lower court’s decision that held State Farm's flood exclusion unambiguously excludes coverage for storm surge that caused damage to the Tuepker's home.
InsureReinsure.com will continue to monitor Katrina-related coverage developments.