(Article from Insurance Law Alert, September 2021)
For more information, please visit the Insurance Law Alert Resource Center.
Noting the absence of state law precedent on the issue, the Fifth Circuit asked the Texas Supreme Court to address the parameters of the concurrent cause doctrine, including which party bears the burden of proof regarding covered versus non-covered causes of damage. Frymire Home Servs. Inc. v. Ohio Security Ins. Co., 2021 WL 3783150 (5th Cir. Aug. 26, 2021), certified question accepted (Tex. Sept. 10, 2021).
The policyholder sought property coverage for roof damage allegedly incurred during a hailstorm. The insurer denied the claim, arguing that the damage was caused by wear and tear (which was excluded under the policy), rather than by wind and hail (which were covered perils). The policyholder’s adjuster opined that although some preexisting roof damage was possible, the hailstorm was the cause of the damage for which the policyholder sought repair.
The Fifth Circuit observed that this case “raises the difficult specter of whether any ‘wear or tear’ on a roof triggers the ‘concurrent cause’ scenario in building insurance cases.” Further, the court noted that if the concurrent causation doctrine applies, there remain unsettled questions of law, including whether the policyholder, in advancing a sole-cause theory of damage, bears the burden of discrediting concurrent causes, and if so, what evidence is sufficient to establish a single cause of loss. As such, the Fifth Circuit certified the following questions to the Texas Supreme Court:
1. Whether the concurrent cause doctrine applies where there is any non-covered damage, including ‘wear and tear’ to an insured property, but such damage does not directly cause the particular loss eventually experienced by plaintiffs;
2. If so, whether plaintiffs alleging that their loss was entirely caused by a single, covered peril bear the burden of attributing losses between that peril and other, non-covered or excluded perils that plaintiffs contend did not cause the particular loss; and
3. If so, whether plaintiffs can meet that burden with evidence indicating that the covered peril caused the entirety of the loss (that is, by implicitly attributing one hundred percent of the loss to that peril).
We will report on developments in this matter.