121 Ensuing Loss Explained: Steven M. Bush on Coverage, Causation & Policy Language

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Speaker B: See. Well, welcome. I did the math last night. This is our 15th training recording in progress. Um, so the, and it comes out to be as of into the session on Friday, we've trained over 400 public adjusters. Not bad. Pretty cool. Um, the reason we do it is, as Mr. Bart Denim can tell you, our industry is under attack from, from every angle possible right now. And it's getting worse and worse and worse. And um, I think you'll agree with me, Mr. Bush, I think the majority of the problem is self inflicted. A lot of it. We don't do a great job of lifting each other up and working together and understanding what we're supposed to be doing. And it's uh, I think people think public adjusting is a get rich scheme quickly thing. And it's not. It's actually the opposite. You work your ass off and you hope to get paid in a year. And I think what the problem is, a lot of us in our industry grab our license and start doing claims and don't really know what we're doing. And I for one was guilty of that when I first started doing this. I literally got a business card, started doing stuff. And the first 400 people I worked for I could probably go back and fix and probably get them millions of dollars more because I did not know what I was doing. So we started doing this, God, seven, six, seven years ago I think we started this training thing and um, it's cool and it's a way to give back. I feel this industry for me personally has given me, uh, friendships across the country. It's given me some wealth, it's given me a lot of knowledge. Um, I enjoy the living hell out of it. It's a beautiful thing what we do. We get to help, uh, people, we get to help businesses. And if you do it right, you can make a really nice living doing it. Or if you do it wrong, you can go down the toilet very quickly and screw a lot of people. And the problem is there's not a lot of middle. Um, so this training stuff, not a lot of people train, which is amazing to me. Cal, uh, Spoon does it. Matt Mulholland does a little bit of it on the PA side. There's just not a lot there. And until we get our act together as an industry, I mean, Stephen's going to talk about this too later on tomorrow is. I don't think the insurance companies are going to take us seriously until we get our poop group, our poop a little bit better. Because, um, the stuff y' all see on Facebook and the answers you get on Facebook are probably not real. They're inaccurate, they're incorrect, they're, um, um, inappropriate. And a lot of them are completely a disaster. So a couple housekeeping things I want to get into bathrooms out to the upright parking. We're going to validate. Just get with Anthony and. Or Liam. Just bring your ticket up front here

Speaker A: and Lillian up front. We'll show validate your ticket.

Speaker B: Um, we're gonna bring lunch in about 12 o'. Clock. There's a lunchroom over here. We can hang out and eat and then we'll fire back up. Um, Frank College, who's running for CFO of Florida, will be here in about two hours. It's important what he's doing. I want you guys to talk and listen because the last CFO of Florida called us Locust. So we don't want that to be a thing. So he really needs our support as an industry to get behind him. So if you guys live in Florida, donate, vote, the whole thing, man. 50 bucks, 100 bucks makes a big difference. But biggest thing is vote. Get out there and get off your butts and vote. Because this is. We'll talk about Kentucky later on too, but it's going against us very quickly. So, uh, also, Anthony, thank you for all this. It's been a lot of work. Liam, thank you for helping the behind the scenes stuff. Guys, to do this with 15 people on Zoom and 20 people in the room, it gets hectic and crazy and nuts. Rebecca, who's on Zoom, uh, is our backbone to all this. Rebecca, thank you for everything you've done on this. It's been, uh, a controlled chaos, I want to say, logistically. Uh, thank you again, Randall, for coming and filming all this. How many have you been to? Randall? This is your. I was one of the first people at your training. So that was in Skipton, in Scottsdale. Eight Years ago. Seven years. Was that during COVID Yeah, it was.

Speaker A: It was before.

Speaker B: Yeah, it was.

Speaker A: Yeah, it was Covid time.

Speaker B: So it was literally three people on the planes. Yeah. Uh, so Arizona a little. I'll go off the rails for a little bit. But we, our first training was right in the middle of COVID and Arizona. We didn't really close. We kept everything open. It was great. So we had a bunch of people flying and we were going out the bars having a great time and it was so fun. So we have a tendency to have a good time after the event and that's part of it. So, um, yeah, we have a good time. So, um, that's enough of my yammering. But guys, this is your class. Ask questions, Be involved, be engaged. We want you guys to, um, learn. But the cool part too is I want, we learn from you guys too, because questions will come up that we've never thought of before and we want to learn from all this stuff and just be better as an industry. Um, Mr. Bush is one of my favorite people in this world, number one. And number two, uh, one of my favorite people to present because if we had more people like Mr. Bush in this industry, we would be a lot better off. He's been an advocate for our business for a long time. He's put his neck on the line a few times. He's been followed by the FBI, I'm pretty sure, on some shit they've been doing. I'm sure you saw him on 60 Minutes. Um, personally, I can't thank you enough for everything you've done for my family and me personally and the industry in general, um, we are a much better place because of people like you. And you know, I mean that with everything I got. Thank you. Thank you. Um, side story, when my daughter was getting ready to go to law school, Mr. Bush got on the phone and wrote a beautiful three page letter to get her into law school. So I will never forget that. And she graduates in two weeks. So I have two more payments and that's it. Thank God. So, yeah, anyway, um, we're going to start off with something pretty deep here. Usually this is the second day stuff, but, uh, we had him mixed around his schedule with Chip and Steven. So, um, have you all done this ensuing loss before? I still barely get it. So we're going to do it first thing in the morning because it's hard and it's very in depth and once you get it, man, it's going to open up a whole different world of your claims. But you really gotta absorb and think. It's very difficult to think through. But like I said, once you all get it, it's pretty cool. So, um, that being said, thank you all for coming. Uh, there is another conference room across the hall if you need to take zooms or phone calls and step out for a minute, please do that. Don't hesitate, man. And once again, this is your thing. We're all here to teach and learn, so we go with everything.

Speaker A: Yeah, uh, let me just get that off the screen there for you.

Speaker B: Don't show this again. Cool. All right, Mr. Bush. It's all you, baby.

Speaker A: All right, great. Thank you, Jack. Thanks for those kind words. I'm going to hope that's been recorded so I can, uh, keep that for prosperity. Jack is right. Um, the industry is definitely under attack where public adjusters are concerned all across the country. I do think some of it is self inflicted, but I do think that a lot of it is just insurance companies and their overall arching agenda is to eliminate policyholders from having representation. That's just it. So we do have to be better as an industry. We have to be a lot better as an industry. And you've taken the first step by coming today and continuing your education and that's good. So how many of you have heard me speak before? Oh, everybody. Okay, well then you guys know I always bring meat, I don't bring milk. And today, uh, we're getting a big tomahawk today with ensuing loss. Most attorneys don't even understand ensuing loss. Concurrent causation, which is not the same. Everybody thinks, oh, it's anti concurrent causation. It's not, it's not the same. And we're going to learn why. And proximate cause how many of you see online, um, all the time in the Facebook groups, oh, that's proximate cause. That's proximate cause. Well, that's not proximate cause 95% of the time. All right? But you're going to know what it is today by the time we leave. And we are going to take this slow and easy because it's thick. Now, there are different laws across the country. Most of the country follows Florida, but not everybody. Texas is different, as Javier will be happy to tell you. Texas is very different. Illinois is different. Illinois is a little close to Texas, but it has some little nuances in and of itself. Alright, so take lots of notes because I really want you to get this, because this will help you in resolving a lot of your claims because you're going to Have a different perspective. Now, when you look at the policy and when you read the policy, you're going to be able to identify is this ensuing loss, is this anti concurrent causation or is this, uh, a jurisdiction that follows proximate cause you're going to know and you're going to be able to recognize it. Because guess what, in the policy it doesn't say ensuing loss most of the time. Most of the time it doesn't even say anti concurrent causation. But you got to be able to read the policy and say, oh, that's what that's talking about. Now I get it. Now I understand. So we are going to take this slow and easy, alright? Because it is a difficult topic, uh, and it's pretty thick. But let's start with ensuing loss. I like to start here. So I first started this when I had a water loss, I don't know, some eight years ago I had a water loss and um, they weren't going to pay. And I kept saying, I don't understand what you're talking about in the policy. Now remember, by this time I'd already been a contractor, I'd already been 12 years as a public adjuster and a few years as an attorney. So I didn't even understand it, but I saw that it was an issue and it was a problem. So I dug in and I started figuring it out and I was like, wow, public adjusters really need to understand this. Most attorneys don't even get this, especially when you're talking to them on the defense side. If they do, they're just ignorant to it and they act like they don't

Speaker B: want to hear you.

Speaker A: So I had to figure out how to teach this because it is so complex and so deep. It took me almost six months to create this presentation, literally. And I was working on it constantly. Um, so let's start with ensuing loss. What does the word ensue mean? Ensue means to take place afterward or as a result of. Alright. It's often misinterpreted m or misapplied by insurance adjusters as a means to deny the claim. Now, a great place is in the water loss provisions. How many of you have had a water loss where they send you and they clip out the policy about this much of the policy that says why they don't pay for a water loss, but they leave out that last little sentence that says, however, we do pay for ensuing loss. You seen that in the policy? Yeah, uh, it's there. Right? But they never put that in the Coverage determination letter. Do they? They never put that. But what does that mean? What does that mean? And that's what we're going to get into today. So ensuing loss provision, what does it do? It does not cover damages to the excluded cause of loss. In other words, the broken pipe. We already know that. Right? You knew that. You knew that. But it does cover all of the losses it's caused to other parts of the property. What would that be? Water damage. Water damage, Right. All right, so think of it that way. Now, you can take that same concept and you can apply that to a roof claim. And we're going to get into an example like that as well. So the U.S. court of Appeals for the 6th Circuit says that an ensuing loss clause, it serves two purposes. One, it reaffirms that what is not excluded. Covered. What's not excluded is covered. So what does that mean you have to do when you read the policy? You have to read the policy. Those of you have been to my presentation before, we always talk about how you read the policy. You read it with purpose and with intent. Right. And markers. Right. I have it. Yeah. Maybe I should give you guys my, uh, highlighting thing. You want me to give them that? It does work, doesn't it? All right, I'll give you that really quick. We'll pause and take a break, uh, and talk about that. Because Jack brings up a good, um, point. I'm a little bit. Well, I'm a whole lot kinetic. I'm just kinetic as a learner. And so back in the old days, because you got to remember, I've been around 20 years. Can you believe it's been 20 years, Javier? 20 years.

Speaker B: You're only 30

Speaker A: in September. It's been 20 years that I've been in the business. But I had a lot of files, right? And back then, we didn't have all these CMRs and all that stuff. We had paper files, which I still like, by the way. But what happened was when I would get a call from an adjuster and I pulled the file out, I couldn't remember where it was in the policy. So it took me time to read it and figure it out again. So I came up with a highlighting system that I used in law school because of my kinetics. So when I read a policy, I always have four or five highlighters. So post loss obligations, I always highlight in yellow in the policy. You can do that online. If you have a PDF right. Of the policy, you can do it online. Highlight the post loss obligations in yellow so that you can make sure. That you know what they are and so that you can comply. Because what happens if you don't comply with post loss obligations? They don't have to pay you. They don't have to pay you. You want to get paid how fast? You want to get paid how fast? Then you have to comply with the post loss obligations. If you don't know what they are, how are you going to do it? Right. You have to know what those post loss obligations are. So highlight them in yellow so you know and you can check them off as you go. Coverages. What color do you think I put coverages in?

Speaker B: Green. Uh.

Speaker A: Have you been here before? You heard this before, haven't you? You've heard me say this before. Green. Why green? That's right. That's right. All coverages that apply to the loss don't go through there and highlight everything. Only the coverages that apply to the peril that you are representing that client for. If it's not a water loss, guess what you don't need to highlight. Right? You don't need it. Exclusions or color pink because red's too dark. So we highlight exclusions in pink. But we always have these endorsements, right? And what do endorsements sometimes do? They change and they either bring coverages back in or what do they do? They uh, take them away. So anything that takes away adds back. I highlight in orange. Now anything that I want to know that is important to know about the policy in particular, such as if it restricts how long you have to uh, for the loss, if they have the one year provisions, if it has the 180 day clauses in it, if it has ordinance in law, things of that I usually highlight in purple. Alright, so that's my highlighting system and what I use. And if you'll use it and you'll start using it on a regular basis, you'll find that when you pull that policy back up, it's easier for you to start identifying what you need and you can move forward with it. So back to ensuing loss. In ensuing loss clause, it serves two purposes, reaffirms that what's not excluded is covered and the clause establishes that chronologically. What? All right. And what does the word ensue mean? Got it. Damages caused by peril, not otherwise excluded, remain covered. So what do you have to do to know what remains covered and what's excluded? What do you have to do? Jack? What do they have to do? Read, um, read the policy. All right, so third DCA Florida case. If the insured suffer consequential loss as a result of a corroded pipe, which we're talking about, because this has seen a lot in water losses and that consequential or ensuing. Hmm, we've heard this word before, haven't we? You hear that all the time in the Facebook groups. Oh, that's consequential lawsuits. It's not, but you're going to know that it is today. Right, because what is consequential associated with, is not excluded under another provision of the policy. The loss is covered. It's covered. So what do you have to do? You got to read the policy. All right. Illinois. Oh, they're a little bit crazy, a little bit different. How many of you work in Illinois or have claims in Illinois? Few. Okay. So they recognize that a resulting or ensuing loss clause that operates to carve out an exception to the policy exclusion and thus it limits the scope. It limits the scope of what is otherwise excluded under the policy. It limits the scope. Alright. That's the difference. What does Florida and most jurisdictions say? What's not excluded? What do they say here? So if one specific uncovered event takes place, any ensuing loss which is otherwise covered by the policy will remain covered. And the uncovered event itself, however, is never covered. So an ensuing loss clause does not reinsert coverage for excluded losses, but reaffirms coverage for secondary, uh, losses ultimately caused by excluded peril. We're going to learn what a secondary loss is later, such as roof damage. And that roof damage is, um, um, builder defect, installed improperly, suffers a water loss. The peril would be covered. Why would it be covered? Because what's the peril? Rain. Right. Unexcluded. Excluded. Similar to Florida, just a little different. Alright, so courts interpret ensuing loss provision to apply to the situation where there is a peril, a hazard or occurrence which causes a loss or injury. Separate and independent. Separate and independent, but resulting from the original excluded peril from which the loss ensues. So the question in analyzing ensuing loss clauses is whether the loss that ensues from the excluded event is covered or excluded. If the ensuing loss is also an excluded peril, if the ensuing loss is also an excluded peril or an excluded loss under the policy, no coverage. All right. But if it covers the peril to loss that results from the excluded event, then the ensuing loss clause provides coverage. It's confusing, isn't it? I'll let it set a minute. All right. So how does ensuing loss apply in the insurance policies? So we must show damage that's separate and distinct from the excluded causal loss. Ensuing Loss coverage. Even when the loss was originally set in motion by an excluded cause, it's going to be covered. Here are some examples of what you'll see in the policy. All right. Thick. It's thick, isn't it? All right. Any questions? Got it so far.

Speaker B: It's okay if you don't.

Speaker A: You'll catch it though. You'll catch it all right. So what you'll see sometimes in the policies, you'll see them say we do not insure for loss of property described in whatever the coverage is caused by the following. However, any ensuing loss to the property described in what are the applicable coverages are not excluded or accepted in this policy as covered. That's usually the part that we see in most of the water losses, right? That they leave out. That's the sentence they leave out in the coverage determination letter. In the event an excluded cause of loss results in a covered cause of loss, the company will be liable only for such resulting loss or damage. See, nothing in there says ensuing, does it? But when you read that now in the policy, guess what? You're going to know and you're going to be able to use that and say, hey, wait, wait. Don't you cover for the resulting loss? In other words, don't you cover for the ensuing portion? The ensuing portion.

Speaker B: Remember that whole thing about how we got it covered?

Speaker A: Um, not in this presentation. Uh, it might come up though in the water stuff later. We might get very, very. Alright, so homeowners, roof leaks, intruding rainwater causes damage to the walls, the floor and other parts of the interior of the house. The adjuster concludes that the leak was caused by improper installation. Insurer then denies coverage, pointing out that the anti concurrent causation language and arguing that faulty workmanship, which is an excluded peril, directly or indirectly caused the loss. So the question is, did the faulty workmanship which is an excluded peril directly or indirectly cause a loss? Yes, it did. Didn't caused it. But insurers, they attempt to avoid coverage by framing the issue as a question of whether an excluded peril had a role in causing the loss. Which we know it does, right? We've already established that it did. If an excluded peril did have a role, then the insurers contend that the loss is no longer covered. But what do we know? We know something different now when we look at these coverage determination letters, right? So in our example, the negligent installation of the roof caused the damage it was in the chain of events. But the claim is for damages to the interior of the house, not the cost to repair the roof. Light bulb moment over there. Got it. All right, so when you're, when you handle these claims, you know, and you have that situation, don't go for the roof because you know it's excluded. You're going to go for what? The interior undeniable that the water damage ensued from the covered peril. Which was rank. Exactly. Alright, so did a uh, loss ensue from uh. Meaning did it follow a cover of peril? If it did, it should be covered regardless. Whether it ensued from at least in part or not, it should be a covered peril. Alright. So ensuing means occurring afterward or as a result of concurrent or concurrent causation means, which is why it's different existing, happening or done at the same time. Concurrent the word same time. M definition. So relating to the reaction. So synergistic means relating to the interaction or cooperation of two or more organizations, substances or other agents to produce a combined effect greater than the sum of their separate effects. That's what the word synergistic means. And that's what we have here. Right. We have a synergistic situation where two events, we use the roof, improper installation, rainwater, enter the house.

Speaker B: Right.

Speaker A: And sued from. So when it's covered and non covered perils combine to cause the loss, which peril caused the damage is always going to be your question. Which peril caused the damage? Who has the burden of proof? Because in Texas. Guess who has the burden of proof in Texas? The insured. The insured. And that sucks. It sucks. Florida insurance company.

Speaker B: It's odd. It's different.

Speaker A: Very. Yep. So contractual language in the policy always look for that. So efficient proximate cause doctrine applies where a covered peril and an excluded peril combine to cause the loss. They combine. Efficient proximate cause. Concurrent causation applies when two causes independently combine to damage property and neither causes the loss. So what's the difference? Under efficient proximate cause is where there is an occurrence of different perils, the efficient cause, the efficient cause, or in other words the one that sets the other one into motion, is the cause to which the loss is attributed. So in jurisdictions that follow the efficient proximal cause doctrine, you need to know that because guess what? If the one that set the cause of loss in the motion can be attributed or can be determined. No coverage. But under the concurrent causation doctrines, jurisdictions that don't follow that, guess what? We have coverage. We have coverage. All right. So under the efficient prosper cause doctrine, in determining the existence the Coverage courts focus on whether the policy ensures against the event that precipitates. Say it. Thank you. I never can get that word out.

Speaker B: The loss.

Speaker A: In other words, if a covered peril and excluded peril combine to cause the loss, a policy generally only provides coverage if the covered peril was the what. So that's under efficient proximate cause. That's different than ensuing. Right. So under ensuing, what has to happen, though? It takes place. What? Under efficient and concurrent, it happens. But the difference between efficient and concurrent is you can identify which one was, uh, the predominant cause. And if that one is excluded on the policy, we have no coverage. All right, so if a covered peril and excluded peril combined to cause a loss, the policy engineering only provides coverage if the covered peril was the predominant cause of the loss. Under the efficient proximate cause approach, the efficient or the proximate cause is the one that sets the other in motion. That's the, uh, Sabo case. So if a fire causes damage to a building and also causes an explosion that further damages the building, then the fire is the what. And what would the explosion be? I say it's the ensuing. But believe it or not, even the court didn't understand and they call it the concurrent.

Speaker B: It was.

Speaker A: Right. But it would have been the ensuing. Why? Because it would have taken place after. Had to have the fire to cause the explosion. Exactly. So the policy covers damage from fire but excludes coverage from the damage from the explosion. Coverage is nonetheless triggered. It's nonetheless triggered under an efficient proximate cause theory. Why? Because it's covered peril fire. And it caused excluded peril, which was. But what is the explosion? It is excluded under most policies. Right. All right. So if the sequence of events is reversed, however, and the explosion, which is a non covered peril, causes the fire, which is covered peril, then there's no coverage. So what do you really need to know? What happened first? Chain of events. You got to know the chain of events. How do you get to the chain of events? What do you usually do? Pas Investigate. You have to ask questions. You have to ask lots of questions. And if you guys are not using an intake form, shame on Jack. You need an intake form. If you don't have one, we have one. We'll give you because it helps you. It guides you. And the questions you need to be asking your policyholders to help you get to the information, the data that you need. And why do you need that data? So you can effectively apply it to the policy. Right. And represent them properly. So in the Evansville Brewing Company, the Florida Supreme Court applied the efficient proxima calls doctrine where the coverage at issue provided under an RX fire policy excluded loss caused by explosion. And here's what the court explained. It said, while the insurer is not liable for a loss caused by an explosion. Alright. Not liable for a cause of loss caused by an explosion which was not produced by the fire. Yet if the explosion is caused by fire during its progress in the building, the fire is the what? It's the what. Alright. So now what I want you to notice is look how the court used the proximate cause doctrine in association with what? Concurrent causation. See how they relate. Alright. The explosion being a mere incident of the fire, and the insurer is liable in finding that coverage under the policy drew a distinction between a covered peril setting into motion and uncovered peril. Right. A covered peril setting into motion and uncovered peril. But for ensuing loss, what do we need? We need an uncovered peril setting into motion a covered peril. But for this, we need a covered peril setting into motion an uncovered peril. Did you have a question?

Speaker B: Yeah.

Speaker A: So from the explosion, what if there's a chemical contamination from the explosion that has happened? Well, we need to look at the policy. Right. What the. Most policies don't cover chemicals, um, and things of that sort. But if the fire started first and caused that, it's covered most of the time, I'd say most of the time. Because we have to do what?

Speaker B: Rftp.

Speaker A: Rftp.

Speaker B: All right,

Speaker A: so Illinois. Back to Illinois. Let's build on what we learned on Illinois. There are four basic stops on the casual spectrum of insurance coverage. One, most broadly, but four are minimally sufficient causation providing coverage if a covered cause contributes to the loss, regardless of its dominance or order in a chain of events. In the middle. In the middle is the efficient or dominant proximate causation providing coverage if a risk of loss that is specifically insured against in the insurance policy is what specifically insured against in the insurance policy sets in motion an unbroken casual sequence. Right. So what do we need here? We need an unbroken casual sequence. The events that cause the ultimate loss, even though the immediate cause in the chain of causation is an exc. Excluded cause, or if it is simply the dominant cause, it's what covered or uncovered M. It's covered. Right. Should be covered more narrowly. Immediate causation providing coverage only where the covered loss or covered cause is the last immediate cause in the chain of causation and Four, most narrowly, regardless of order, if any excluded cause contributes to the loss, there's no coverage. It flipped it. Let it set a minute. I told you guys this was thick. I can't believe the very first thing you get today is this. That was Jack's choice. Yeah, this is. No, this is not rookie ball. This is thick. All right, so the efficient practical cause doctrine, it does not apply to a case involving more than one cause where none of the causes is sufficient by itself. So where would this apply? It could apply in any loss. It could apply with hail, hurricane, tornado, um, so basically like if you had wind and hail water, you only had a little bit of hail damage and a little bit of wind damage and it's still not enough to. That's right, that's right. The doctrine applies to instances where several causes relate to one another in a chain of causation. But where individually. Where individually each cause would have been sufficient to cause the damage in question. I know, guys, I apologize. I know it's thick, I know it's thick. But California, let's look at California for a minute. They started all this as usual. Alright, so in determining whether a loss is within an exception in the insurance policy, where there is a concurrence of different causes, A concurrence of different causes, that's important. The efficient cause. The efficient cause. What did we learn about the efficient cause? It's what the one that sets the other in motion, it's the dominant cause, right? It's the cause to which the loss is to be attributed, though other causes may follow it and operate more immediately in producing the disaster. So they thus reason that a covered peril that convenes with an uncovered peril may still provide coverage under the policy when the covered peril triggered the events that eventually led to the loss. To me, if you want to break all this down, no matter what the states are, this one sentence you could use for almost everything, wouldn't you agree? The way it's worded, A covered peril that convenes with. Or we could say what happens after, Right, A covered peril. Because what do we need in suing loss? We need uncovered with a covered right may still provide coverage under the policy when the covered peril triggered the events that eventually led to the loss. It's applicable when independent perils converge and no single cause can be considered the sole or proximate cause. So when the doctor's apple, the insurer must pay the entire loss, the entire loss. That's different than ensuing, isn't it? Because in ensuing, what do they owe for just the covered. But here. Right. What do they owe for, uh, for the entire loss if at least one of the causes is covered by the policy. Got a question? All right.

Speaker B: I actually have a question.

Speaker A: Go ahead. So, um, in Texas, doesn't Texas have case law against concurrent causation? Yeah, they do, but basically what it is is that they put shift the burden back to the. The policyholder, and the policyholder has to separate out the damages, which is ridiculous. Ridiculous. I just didn't know. Yeah, I think we have some Texas stuff in here somewhere. I'm not sure. I haven't done this presentation. Well, what Anthony would know, probably about a month or two. Um, but I think there's some Texas stuff in here. All right. So the concurrent causation doctrine provides that coverage may exist where an insured risk constitutes a concurrent cause of the loss, even when it's not the prime or the efficient cause. I know. We're repeating ourselves. It sounds like we're saying the same thing over and over, Right? Well, we are. Why? Because I want it to get in. I'm hoping one of them will get in. All right. So the concurrent causation doctrine, it originated with California Supreme Court decision in Partridge, and it was presented with a somewhat novel question of insurance. And it wasn't even really property damage. So with two negligent acts of an insured, how often do we have that happen? All the time. Right. Two negligent acts of the insured, one auto related and the other non auto related, constitute concurrent causes of an accident. Is the insured covered under both his homeowner's policy and his automobile policy, or his coverage limited to the auto policy? That was the question that they had to ask or answer. So the homeowner's policy contained an exclusion for bodily injury that arose out of use of any motor vehicle state, uh, who is this? Snake farm, like a bad neighbor, relied on this exclusionary language to argue that only the automobile policy provided coverage for the injuries. So first the court noted that exclusionary causes, they're what? They're more strictly construed. Always. Right coverages are always liberally construed by the court. Why is that? Because they're always in favor of the policyholder. Because the policy is what? It's a contract of adhesion. So the court reasoned that an insured risk combined with an excluded risk to produce the ultimate injury and determined that coverage under the liability interest policy is equally available to an insured. Whether an insured risk constitutes simply a concurrent proximate cause of the injuries. Thus, because neither peril could have created the loss alone. Alright, that's important because what are we talking about here? Concurrent causation and efficient proxima cause doctrine. Right. The two together. We have to know what we're dealing with, what the jurisdiction is and what the policy says says, but instead combine to create the loss. The California Supreme Court cannot identify the prime, which would be the efficient. Right. The prime would be the efficient cause moving or efficient cause in order to determine coverage and pronounce the new doctrine, which is what we have today. So where do we see it in this Cibo case in Florida? If you guys don't have that, you ought to get that case and just read that because they do a very good job of explaining it and laying things out pretty much in detail as it relates to Mr. Cibo's claim.

Speaker B: So how do you feel about public adjusters quoting law in an email to an insurance company?

Speaker A: I think you should not. Absolutely should not. Well, what you can say is it's my understanding that X, Y and Z, whatever the law is, but don't say the law and don't say based upon sibo. You know, don't, don't quote case law. But, uh, you. But I think it's okay if you say, look, it's my understanding that under the efficient proximate cause doctrine, the cause that set the other in motion, that can be identified. Right. Would be the excluded cause or would be the covered cause based upon the policy. You're perfectly fine with saying that.

Speaker B: So that's not practicing law.

Speaker A: That's not practicing law because you never quoted statute, you never said anything about law. You just say, it's my understanding that under the efficient proximate cause doctrine, the one that's the identifiable one that set the other in motion is or is not covered under the policy. Therefore everything else should be covered. Right? I don't think you said anything there that would get you in any trouble. So, uh, in cboe, the policy said we don't cover any loss caused by faulty, inadequate or defective. And they want. The big one was maintenance because they didn't maintain the building. All right, so it was not in dispute that rainwater, um, and hurricane winds combined with, um, defective construction to cause the damages to Sabo's property. There's no reasonable way to distinguish the proximate cause of Sabo's property loss, the rain and construction defects. They did what they acted in to create the destruction of his home. As such, it would not be feasible to apply the efficient proximate cause doctrine. Epc. Because what no efficient cause can be determined because they did what they combined in together. So as stated in Walsh, whether perils combine with human negligence to cause the loss, it seems logical and reasonable to find the loss covered by what type of policy, Even if one of the causes is excluded from coverage. Even if one of the causes is excluded from coverage. So what do we have here? What do we have? So under Texas law, which you were asking about, and that's the National Union fire Insurance of Pittsburgh vs. Puget Plastics, the insured, uh, under Texas odds, the insured burden to allocate the amount of loss that is attributable to a covered cause of loss versus a non covered, which I think is absolutely stupid. So to the extent a covered peril and a non covered peril contribute to a claim, the insured has the burden of allocating its losses between the two perils and is only entitled to recover losses caused by the covered peril. Which is why in Texas you have all those multiple storms, you have the multiple hail storms, all of those good things and you have to be able to separate it out. How many of you work in Texas? Just one. Oh, all right. A lot. All right, so you have to be able to separate it out. So what's your best weapon to use in Texas? Absolutely not. Yeah, uh, that's where. Yeah, if you knew how many. That's every roofer in Texas answer. I know it. But if you, but if you knew how many calls a week I get where appraisals went bad in Texas, you'd be shocked. I get calls all the time where appraisals are going bad in Texas. Um, what's your best weapon to use weather forensics? Specific to the location. It has to be specific to the location. Alright. There's lots of places where you can get good weather reports specific to the location. Because what does insurance company say about half inch hail? It does what doesn't damage it, but what does damage it? So if you had a weather event that had half inch hail, did it hit your, your homeowner's house or did it hit down the road? And here's my question. I always loved, I love to ask this question. It makes them so mad in Depot. Well, that's old. Hell, I'm like, oh really? How old is it? How old is it?

Speaker B: The day before the policy went over,

Speaker A: how old's the hell? Well, you said it was old. Obviously you know it's old, so how do you know? How do you know it's old. Uh, how old is it? All right, so use your weather forensics reports to separate that out so that you can show that there was no damage prior to or, uh, that there was some damage prior to. So is that something that would be the public adjuster's responsibility? Absolutely. No, that's your job. Your job is to represent that policyholder. And part of representing that policyholder is to figure out what the damages are, what the coverages are, and then go advocate for that policyholder. So you need to know, if you're not pulling weather forensic reports on every cause, we do it before we sign the claim. That's weather related and it needs to be specific to the location. Don't pull one from a weather station 15 miles away.

Speaker B: All right?

Speaker A: That's not going to help you. Yeah, the engineers do that all the time. That's why they hired a meteorologist on staff.

Speaker B: If it's old hail, they have to give you a date of old hail. They just say it's old hail. They have to give you a date, don't they? They have to give.

Speaker A: Be able to determine what storm it came from? Uh, well, not in Texas. Right. Texas. Let's say, for example, in Houston in, uh, In May of 2024, there was a tornado, and then in July of 2024, there was a hurricane burrow, and everybody had opened up a tornado, and then everybody opened up a burrow. Well, you got to distinguish which claims are which. Yeah, you have to be able to do that. What damages caused what. But if you opened up a claim for the tornado, you should have what to help you identify that Photographs. You should have an estimate. By then you should have already had that information. Or maybe the policyholder had photos after the tornado so that you could say, okay, this was damaged by the hurricane. This was damaged by the tornado. Separate them out. Uh, Jackson, we use it for weather

Speaker B: forensic, but also what we do is we give the narrative of the direction

Speaker A: of the storm, too, so that we're providing that narrative of the direction of the hail. Yeah, that's good. And d be careful what you use. Uh, and make it specific to the location, because I have literally had weather forensics reports where three houses down got Z0 hail, and three houses up got an inch and a half, two inch hail. Exactly. So use those to help you to distinguish. All right. So the lady three doors down decided she wanted a new roof. So she calls Snake Farm. Snake Farm goes out and says, we don't have any hail damage. So then they come to my client's house and they say what? Well, that's old. Well, she didn't have any hail. How come you got hell? Because they're not smart enough to figure out that, uh, there's a start and stop point with hell. Right. All right, so failure to segregate coverage and non covered perils is fatal in Texas. It's what? Fatal. So if you don't do it in Texas, guess what, you're not getting paid. Not getting paid. And it may be holding up your claim, may be the reason why you haven't gotten paid yet. Our coverage hasn't been determined yet, so, uh, sometimes. That's right, that's right. Storms. Like we had a storm that actually like wasn't even on any of the radars, so we even had a different meteorologist miss it completely. And our meteorologist was able to like trace the storm and where it went in between the stations and find, you know, 100 mile per hour wind speeds.

Speaker B: So.

Speaker A: All right, so come on in. How you doing? Grab a seat anywhere. All right, so the Hamilton case is the case that they love to cite all the time. And they say that you failed to make a showing that could allocate damages between the hail storm occurring during the policy period and one that um, occurred prior to the policy period. That's the one that they always love to use. So be careful, be careful, be careful. Come on in, grab a seat anywhere. You're at a good time. You're at the end of this very thick presentation. Another hour. Oh my lord. Well, I can give you another hour. All right, so if excluded and covered perils combine to cause a loss and the damage from the two causes cannot be separated, then the loss will be deemed caused by. And what will it do in Texas? It triggers. What does it do in most other jurisdictions? It, uh, grants coverage. See how hard Texas can be? That's why you have to take an extra step in Texas. You got to do one more thing in Texas. Alright, so the Texas Supreme Court, uh, has noted that if a covered event and an excluded event each independently cause the loss, separate and independent causation exists. And the insured must provide coverage despite the exclusion. But what do you have to prove? Separate and independent. Separate and independent. That's the burden. Difficult in Texas, but you just have to take those extra steps. Alright? And you can do that by using photographs, interview other homeowners, Ring cameras, YouTube, anything like that. You can use all of that to help you help, uh, you get the information you need to provide to the carrier, that coverage should be extended. So Illinois specific On um, uh, concurrent causation, if approximate cause of an injury comes within the included coverage of the insurance policy, the coverage is not voided merely because the policy excludes an additional proximate cause of the injury. There are four basic stops on the casual spectrum of insurance coverage and this is important for you to know. If you work. How many of you work in Illinois? Alright, not a lot, but the. But four are minimally sufficient causation providing coverage if the covered cause contributes to the loss regardless of its dominance or order in the chain of events. So a, uh, provision that provides that when a covered cause and a non covered cause combine to cause a loss, all losses directly and indirectly caused by those events are excluded from coverage. Sucks. Right? Where do you guys work? Mostly here in Florida, Texas, Kentucky and Tennessee.

Speaker B: Not Kentucky anymore.

Speaker A: Well, they just outlawed you. They took off public justice for good. Yeah, yeah, in Kentucky.

Speaker B: Right.

Speaker A: So just don't sign anything new. Don't sign anything new. So often insurance policies contain what is known as an anti concurrent causation clause. We've heard that many times, haven't we? Such clauses typically state that if an excluded peril contributes what. Now let me ask you something. Think, uh, I want you to use what we've learned a lot today already and but what I want you to think about, if an excluded peril contributes in any way to damage, that damage is excluded. What does the word anyway include any factors, ensuing loss, proximate cause, an epc. So if you have that language in your policy right now look, does any of that say concurrent causation? Does it say anything about ensuing loss or proximate cause? It does not. But when you see that sentence, what have you got to do? You got to back up. You got to back up and rethink. Probably notify your policyholder and say, hey, your policy is not going to cover X, Y and Z because it says if it contributes in any way, it's not covered. Sabo, the Florida Supreme Court contemplated that it would have applied the epc. What's EPC and efficient proximal cause. What's that doctrine? The one that contributed to or sets the others in motion that cause a loss. Right, that's what we're looking at. But it couldn't do it here in sabo. Had there been anti concurrent causation provisions. So what would have happened? Had they had anti concurrent causation provision, uh, provisions, we would have been able to separate it out which could have possibly provided coverage. Right. So the court was looking for ways to give coverage. So the Policy language governs and it created the doctrines apply only when an insurance policy is silent on how damage caused by multiple paylors should be allocated. Which is why in most of the policies nowadays we have this language. But not all of them. But most of them say that. Alright, just have to know what you're looking for. So the wording is intended to eliminate coverage for a loss that is partially caused by an excluded peril. It's normally located in the exclusion sections of the property policy and in the standard ISO policy, the exclusions are outlined in a causes of loss form. The special all risk. All risk. Because we're talking about all risk policies. Right. Causes of loss form constitute or contains four groups of exclusions. And the anti concurrent causation language applies to the first group. To the first group which excludes the following 8 perils. It sucks that it applies to ordinance and law, doesn't it? This one we don't care about water. That's a big one. Fungus. That's a big one. Earth movement. You guys get a lot of that in other states besides Florida and Texas and California? Um. Alright. The rest of them we don't really care about too much. But the clause states that the insurer will not pay for any loss or damage caused directly or indirectly by any of those eight perils. It's excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. So when it says contributes concurrently or in any sequence to the loss, what are we also including ensuing and proximate cause. All right. So this language is different from the language we saw a while ago, Right? That's why you've got to be able to identify it in the policy. Identify it in the policy. This Mountain dew is chasing me today. Yeah, that's what I'm gonna do. It's chasing me. So an excluded peril is not covered regardless of any other cause or event concern contributing concurrently or in any sequence to the loss. We do not insure for such loss regardless of whether other causes acted concurrently or in any sequence to the excluded event to produce the loss. Look for that terminology. Look for the other one in any sequence. Hurricane. This is our loss. So tell me, is it covered or is it not covered? Huh? What do you think?

Speaker B: M I guess the interior wouldn't be covered.

Speaker A: All uh. Right. Anybody else. Before? I guess I need to know more about the laws person located. How high was the storm surge? What was the weather reports? How fast was the wind? It sounds like it's covered. But it would be covered, right? It's covered.

Speaker B: Yeah.

Speaker A: Because the damage already occurred and then the storm surge was just ensuing. But they already had water intrusion into the property. That's right. Exactly right.

Speaker B: Yeah.

Speaker A: Water intrusion. So, uh, what came first? And wind is a. Under a hurricane policy. Yeah, yeah,

Speaker B: true.

Speaker A: I was looking for the trick. Yeah. Not really a trick, but the problem

Speaker B: is a lot of carriers, especially in Florida. We have these where they said the flood water came at first.

Speaker A: Correct.

Speaker B: And they said, no, we're not going to cover that shit.

Speaker A: All right? So I know it sounds like in some cases we are saying the same thing over and over, but the three doctrines are so closely intertwined that you have to pay attention to the language and what they're actually saying. So understanding what the three meanings are is so important. All right. You have to get through that first. So, uh, do they. I've just seen a lot of case laws. Yeah. So under this, uh, Jaw of the Point, llc, or Jaw the Point, llc, however you want to say it. All right. The court held that the evidence conclusively established that the damage to the property included both wind and flood and that the city based its decision to enforce the ordinances on the combined total of the two. And the court held that because covered and excluded losses combined to cause the enforcement of the ordinances, the policy's anti concurrent causation clause excluded coverage. So we thought it was covered. Right. And now we found out that it's not covered. Great old Texas. So they've been read to preclude coverage for all damage except those caused exclusively by covered cause. The fatal flaw in the district court's rationale is its failure to recognize the three discrete categories of damage at issue in this litigation. One, damage caused exclusively by wind and two, damage caused exclusively by water, and three, damage caused by wind concurrently or in sequence with the water. So if, for example, a policyholder's roof is blown off in a storm and rain enters through the opening, the damage is covered only if storm surge or flooding, which is an excluded peril, then inundates the same area. The rain damage is the excluded cause of loss. Excluded because the loss was caused concurrently are in sequence by the action of a covered and excluded peril. So in Texas, what is the key? It's flipped. Right? It's flipped. So just remember, in Texas, if it's caused concurrently, it's going to be excluded. Most other jurisdictions are going to look for the covered peril. I don't know why Texas is like that. That's what I'm saying. I don't understand the rationale. Yeah. So federal courts. Now we got it. Federal courts. So they applied the Texas law and found that anti concurrent causation causes may foreclose coverage even if all causes of damage cannot be ascertained. So Texas state case law supports that several days at least may lapse between multiple causes. So in the Traveler's indemnity case, They reversed and remanded the case because the trial court failed to allocate the damages between a covered cause of loss. Which is what we've already learned. Right. So when an anti concurrent cause causation clause can be applied to the facts underlying the claim, there's no coverage even if one contributing cause is. Is an excluded event. Which sucks because that's not what we have. This is Illinois. This is Illinois. But, um, that sucks because it's different than what we have in Florida. So here's the overview. This is the one you really need. This is everything we've been setting up. So I probably could have just given you this first and we'd have been done. Right. All right, so let's get to it. Both Texas and Florida insured claiming under an all risk policy. They must show property suffered a loss while the policy was in effect. We all know that. But the burden shifts to the insurer to prove that the damage or loss is excluded from coverage. And in connection with concurrent causation, the burden is on the insurer to prove the loss was caused by an excluded peril, such as flood. The insurer may also try to establish that the loss was caused by a combination of wind and flood damage sufficient to trigger the anti congruent causation. So Florida, if neither the insurer nor the insurer can establish the cause of damage, the insurer may be unable to meet its burden. May be unable to meet its burden. And that provides coverage. But in Texas, where the concurrent causes cannot separate the exclusion, it's triggered such that the insurer has no duty to cover the loss, which is why the burden then shifts to the policyholder to separate out the damages. All right, so that's the one. We'll leave Illinois alone since nobody's really in Illinois. But you got it. It's the same thing. Just repeat it a separate way. All right, so let's talk about it. Questions? What do you have? It's thick, isn't it? It's a lot. It's boring in some aspects. Ensuing loss happens when after what do you uncovered peril followed by a covered peril? Efficient proximate cause doctrine. What are you looking for? M the one that set the other in motion has to be what? Covered.

Speaker B: All right.

Speaker A: Concurrent causation. What happens with concurrent causation happens when? Simultaneously. And in some jurisdictions, if you have one covered peril, everything is covered. In other jurisdictions. You have to do what? That's right. Have to separate them out. Alright, so which one applies to consequences Sequential. M. Ensuing. Yes. At least one person. Got it. Good. So I've done my job today. It's thick. It's a heavy topic. It's heavy.

Speaker B: When your daughter's learning how to drive, you say equally. Here we go. But what you should say is, like

Speaker A: a good neighbor, State Farm is there

Speaker B: to help you choose the coverage you need.

Speaker A: State Farm, Bloomington, Illinois.