Concurrent and Proximate Cause of Loss in California 

The First Party Claims Conference West is underway. One of California’s premier property insurance attorneys, Joel Gumbiner, is discussing the topic of causation and concurrent causation in California. 

California insurance law is unique because it has statutory law in Code 530, which sets the standard for causation: 

An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.

My research of case law construing this statute shows hundreds of cases debating whether a cause of loss is covered, but here are a few examples of California cases in the context of an all-risk insurance policy: 

Under an “all-risk” property insurance policy, it is the efficient proximate cause, i.e., the predominant cause of the loss, that determines coverage under California law. Malkin v. Federal Insurance Company, (C.D.Cal. 2022), 562 F.Supp.3d 854.  

Under all-risk or open peril insurance policy for rental house, if loss was caused by a combination of covered and excluded risks, loss was covered if the most important or predominant cause was a covered risk. Vardanyan v. AMCO Ins. Co. (App. 5 Dist. 2015) 197 Cal.Rptr.3d 195, 243 Cal.App.4th 779, review denied. 

In an “all-risk” homeowners insurance policy, the policy covers all risks except those specifically excepted or excluded, whereas in a “specified-peril” policy, only those risks specifically named are covered. Freedman v. State Farm Ins. Co. (App. 2 Dist. 2009) 93 Cal.Rptr.3d 296, 173 Cal.App.4th 957, review denied.  

All-risk builder’s risk policy for flood control project provided coverage for flood damage to project where flooding contributed to or aggravated loss, even though excluded design defect was found to be efficient proximate cause of the loss, where policy endorsement provided coverage for loss “caused by, contributed to or aggravated by flooding.” Mission National Ins. Co. v. Coachella Valley Water Dist. (App. 4 Dist. 1989) 258 Cal.Rptr. 639, 210 Cal.App.3d 484, review denied.  

When determining whether insurance coverage exists under an “all-risk” homeowner’s policy when loss to insured’s property can be attributed to two causes, one of which is a nonexcluded peril, and the other an excluded peril, courts are to find coverage only if nonexcluded peril is the efficient proximate cause of the loss, rather than finding coverage whenever a nonexcluded peril is a concurrent proximate cause of the loss. Garvey v. State Farm Fire & Casualty Co. (1989) 257 Cal.Rptr. 292, 48 Cal.3d 395, 770 P.2d 704.  

Question of whether included risk of negligent construction or excluded risk of earth movement was the efficient proximate cause of homeowner’s addition pulling away from main structure was for jury in action determining coverage under “all-risk” homeowner’s policy. Garvey v. State Farm Fire & Casualty Co. (1989) 257 Cal.Rptr. 292, 48 Cal.3d 395, 770 P.2d 704.  

Gumbiner noted how mudslides following wildfires resulted in the California Insurance Commissioner sending a formal notice to insurers in 2018, reminding them that the fires were the “predominant” cause of the mudslides and that coverage should be paid. I am not certain other states with different case law would find coverage.  

I found Gumbiner’s discussion of multiple occurrences to be fascinating. When faced with these types of losses, I first remind people to read the policy to see if there is a definition of occurrence. When multiple thefts occur, these cases are often fights over deductibles—are the thefts the result of a common scheme and, therefore, one occurrence or separate occurrences? If considered separate, the deductible has to be considered each time. 

Part of the point of this blog is to encourage attendance at conferences with great teachers and knowledgeable attendees, such as the First Party Claims Conference. Education makes all of us better as we study and discuss claims situations in different parts of the country. 

Thought For The Day 

Those who use ‘Correlation is not the same as causation’ as a magic incantation to dismiss all fact-using professions are fools holding a lit match in one hand and an open gas can in the other, screaming, ‘One has nothing to do with the other!’

—David Brin