Louisiana experienced déjà vu in 2021 when Hurricane Ida inflicted damage to the southeastern part of the State similar to that experienced by citizens impacted by Hurricane Laura one year earlier and on the sixteenth anniversary of Hurricane Katrina. Just over a year removed from Hurricane Ida’s landfall, hundreds, if not thousands, of lawsuits have been filed relating to property damage and disputes under homeowner’s insurance policies. These lawsuits will be guided by rulings from the extensive Hurricane Laura litigation, and insureds and insurers should be cognizant of those rulings when assessing their case.
The Anti-Concurrent Cause Clause Rides Again
A central issue in the Hurricane Laura litigation has been the Anti-Concurrent Causation (“ACC”) clauses in insurance policies that have had little judicial attention since Hurricane Katrina. Generally, an ACC clause provides that a loss caused by a combination of covered and excluded perils will not be covered. This provision may be found in at the beginning of a policy’s list of exclusions with language similar to the following:
We do not pay for loss to the types of property covered under this policy caused by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.
Or there may be a dedicated clause excluding any loss:
caused directly or indirectly by . . . [a]ny damage which occurred prior to policy inception . . . or [a]ny claims or damages arising out of [an excluded peril] . . . regardless of any other cause or event contributing concurrently or in any sequence to the loss.
Louisiana courts have confirmed that ACC provisions are enforceable under Louisiana law and have dismissed claims on summary judgment pursuant to such provisions, notwithstanding other legal presumptions favoring coverage and taking a narrow reading of exclusions.
A Little Clause has a Big Impact
In Little v. Aegis Sec. Ins. Co., the court stated:
The Fifth Circuit has held that ACCs like the one described above are not ambiguous, and may properly exclude coverage for damages caused by a combination of an excluded peril and a non-excluded peril. … Such clauses are not precluded from operation by Louisiana statutory law, case law, or public policy… The defendant [insurer] has the burden of showing that an exclusion applies, by a preponderance of the evidence.
In Little, the district court granted summary judgment in the insurer’s favor as an excluded peril contributed to all losses according to the defendant’s expert and held that the plaintiff’s subjective lay testimony was insufficient to create a genuine issue of material fact.
What Else Might Be Excluded?
Courts have most commonly studied ACC provisions in the context of wind damage (covered) versus flood damage (excluded). However, Louisiana law does not limit the application of ACC Clauses only to excluded perils involving flooding and applies these provisions to any excluded peril listed in the policy. The excluded perils that may impact coverage, in addition to flooding, often include claims or damages arising out of workmanship, repairs, and/or lack of repairs which occurred prior to the policy inception, i.e. poor maintenance and neglect. Because of this, insurers and insureds should be mindful of the damages at issue when assessing claims and thoroughly document any related cause.