Florida Supreme Court Decides That Concurrent Causes Equal Coverage

It's said that "defeat is an orphan," but insurable losses often have multiple, concurrent causes. In some cases, one or more of those causes might be outside the scope of coverage, either by omission or exclusion. In Sebo v. American Home Assurance Company, No. SC14-897 (Fla. Dec. 1, 2016), the Supreme Court of Florida ruled that if damage results from "concurrent causes" and, as between the concurrent causes, an "efficient proximate cause" cannot be determined, it is reasonable to find coverage for the entire loss under an all-risk policy, even if one of the causes is excluded from coverage. As a result, Florida insurers whose policies do not contain anti-concurrent causation language may now be saddled with coverage for damage they intended to exclude.

Leak House

John Sebo, bought a house in Naples, Florida, in April 2005 and insured it with an all-risk property policy issued by American Home. The policy was a manuscript form, providing over $8,000,000 in coverage.

Shortly after the home was purchased, major water leaks occurred during rain storms, and it became evident that the house suffered from significant design and construction defects. In October 2005, Hurricane Wilma further damaged the residence, and Mr. Sebo filed a claim under his policy.

American Home denied coverage for most of the damage, based on an exclusion for "Faulty, Inadequate or Defective Planning." That exclusion provided:

We do not cover any loss caused by faulty, inadequate or defective:

Planning, zoning, development, surveying, siting; Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; Materials used in repair, construction, renovation or remodeling; or Maintenance; of part of all of any property whether on or off the residence."

American Home did, however, provide $50,000 in coverage for mold damage.

The residence could not be repaired and was ultimately demolished. Mr. Sebo subsequently sued a number of defendants, including the sellers of the property, the architect and the construction company, among others, alleging negligent design and construction and failure to disclose defects. He later amended the complaint to add American Home, seeking a declaration that the policy provided coverage for the claimed damages. After settling with most of the other defendants, he proceeded to try the case against American Home. The jury found in favor of the insured, and the trial court entered judgment against the...

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