In the present day, I need to delve into the subject of Ensuing Loss Protection in insurance coverage insurance policies. With hurricane season upon us, understanding this idea is essential, as many owners might face ensuing losses after a main loss occasion. There appears to be some misinformation circulating about this subject, so I’d wish to make clear a couple of key factors. Keep in mind, at all times seek the advice of with an lawyer in your state to grasp particular authorized implications. Not each state is identical.
What’s Ensuing Loss?
The time period “ensuing” means “to happen afterward or consequently.” Within the context of insurance coverage, ensuing loss refers to damages that happen on account of a coated peril following an excluded peril. It’s necessary to notice that ensuing loss is distinct from Concurrent Causation, which I’ll cowl in a future submit.
Many insurance coverage adjusters might misread ensuing loss provisions, probably main to assert denials. An ensuing loss provision in an insurance coverage coverage covers damages to different elements of the property which are separate from the preliminary excluded loss. The U.S. Court docket of Appeals for the Sixth Circuit highlights two functions of an ensuing loss clause: 1
- The clause reaffirms “that what is just not excluded is roofed.”
- The clause “establishes that chronologically later-in-time damages brought on by a peril not in any other case excluded stay coated.”
Authorized Precedents
In Householders Alternative Property & Casualty v. Maspons, 2 the Third District Court docket of Enchantment in Florida said that if a consequential or “ensuing” loss is just not excluded underneath one other provision of the coverage, it’s coated. The insured should display injury that’s separate from the excluded explanation for loss. Even when the preliminary explanation for loss is excluded, ensuing loss protection protects subsequent damages ensuing from a coated peril. 3
Ensuing Loss Clauses in Motion
Ensuing loss clauses can fluctuate in type. One instance reads: “We don’t insure for loss to property described in [applicable coverage] brought on by any of the next. Nevertheless, any ensuing loss to property described in [applicable coverage] not excluded or excepted on this coverage is roofed.” One other variation states: “Within the occasion an excluded explanation for loss ends in a coated explanation for loss, the corporate shall be liable just for such ensuing loss or injury” 4 Within the latter, discover how the phrase “ensuing” is rarely talked about? Policyholder representatives should be capable to acknowledge this language when studying a coverage to be able to apply coverages correctly. Studying easy methods to establish ensuing loss language is vital.
Actual-World Situation
Think about a situation the place a home-owner’s roof leaks, inflicting rainwater to break the inside partitions and flooring of the home. The insurer may deny the declare, citing that the leak was as a result of defective workmanship, which is an excluded peril. Insurers typically argue that if an excluded peril contributed to the loss, the declare is just not coated. Nevertheless, the home-owner’s declare focuses on the rainwater injury, a results of a coated peril—rain.
On this scenario, the following loss clause is essential. The query turns into whether or not the injury ensued from a coated peril. If it did, then the declare must be coated, even when excluded perils have been concerned within the chain of occasions. 5
Conclusion
Understanding ensuing loss protection is significant for householders and insurance coverage professionals alike, particularly throughout hurricane season. I hope this clarification clarifies the subject and assists you in serving to policyholders safe the protection they deserve. At all times seek the advice of with a neighborhood lawyer to grasp how ensuing loss clauses are utilized in your state.
1 TMW Enters., Inc. v. Federal Ins. Co., 619 F.3d 574, 577-79 (sixth Cir. 2010).
2 Householders Alternative Prop. & Cas. v. Maspons, 211 So.3d 1067 (Fla. 3d DCA 2017).
3 The Bartram, LLC v. Landmark Am. Ins. Co., 864 F. Supp. 2nd 1229, 1233, (N.D. Fla. 2012).
4 Robinson+Cole, Archives: Ensuing Loss.
5 Chris French. The “Ensuing Loss” Clause in Insurance coverage Insurance policies: The Forgotten and Misunderstood Antidote to Anti-Concurrent Causation Exclusions. Nevada Legislation Journal Vol. 13 (2012). Out there at: http://works.bepress.com/chris_french/6/