The Insurance Industry’s Latest Scam: The Anti-Concurrent Causation Clause

Everyone remember what happened all over the South when Hurricane Katrina hit in 2005? The insurance companies denied thousands of claims because they said that the damages were due to flood, not wind. So, for those who did not have flood insurance, their claims were denied. The insurance companies paid smaller claims for the wind damages.

Well, the insurance companies got busy since then and have convinced 48 of 50 state Departments of Insurance to approve new policy language. So, understand that this new ripoff is brought to you with the blessing of your state’s Insurance Commissioner.

The Anti-Concurrent Causation Clause is just technical-sounding enough to begin getting your eyelids to slam shut. But don’t leave me! This is one of the worst policy amendments that the insurance industry has ever done.

The new policy language is a part of the language and forms of the Insurance Service Office (ISO), the organization that submits standard policy language to the regulators. Companies like State F*arm Insurance have already filed their own language, but it’s almost identical.

Here’s what the Clause basically says: If any percentage of the damage is caused by a covered peril (like wind) and any smaller percentage of the damage is caused by a peril not covered (like flood), the insurance company can DENY THE ENTIRE CLAIM!!

Here is the exact language from the policy, found under the “Exclusion” section of a homeowners policy:

We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such losses regardless of (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to product the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these.

Then, the policy lists a number of exclusions.

Look at this example. If you live along the Gulf Coast, and hurricane winds caused 90% of your damage, and 10% was caused by the storm surge (not covered in a homeowners policy, the insurance company can and will deny all coverage for all of the damage!

So, for those homeowners living in states where hurricanes, tornados, blizzards, or any kind of severe weather occurs, your policy may not provide you any coverage.

What can you do to fight back?

1. Shop for a policy that does not have this new policy language in it.
2. If you can’t find a policy in your state without that new language, contact your Insurance Commissioner and submit written objections and complaints.