What is an "Ensuing Loss" in the Context of Homeowner Property Insurance Claims?

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

Although Ensuing Loss provisions in homeowner’s insurance policies are now common, these provisions have only been around for about two decades. At its heart, the provision is intended to provide added protection to the insured, but the meaning of the provision and the scope of its protection is often misunderstood. These provisions are often described as an exception to the excluded perils, and carry the effect of preventing insurers from denying otherwise valid claims under the guise that the damage was caused by an excluded peril. Thus, the ensuing loss clause is intended to allow recovery in situations in which an excluded peril combines with a covered peril to produce the homeowners resulting loss. In other words, while an insurance company may not be liable for the loss attributable to the excluded peril, an ensuing loss provision would still allow recovery for an otherwise covered peril that stems from the excluded peril.

In these instances, the damage that will be covered under a homeowner’s policy will be for the property damage that is the natural result of the covered peril, but not for the damage that is caused by the excluded peril. For example, assume that you purchased a home a few months back. At the time you purchased it, the home was only a few years old. Furthermore, assume you purchased an all-risk policy with contents coverage that contains the following language: this policy excludes coverage for faulty workmanship unless loss from a covered peril ensues. On its face, this policy excludes faulty workmanship but provides for ensuing loss coverage for all other covered events. Moreover, because water damage is not specifically excluded in this type of policy, it is a covered peril. A few months have gone by, and you notice that water is intruding into your home from the ceiling, damaging several items of furniture. You file a claim with your insurer, the insurance company sends out an adjuster, and you discover that there is a leak in your roof caused by a faulty roofing installation. Although your insurer will not be required to cover you for the damage to your roof, pursuant to the exclusionary language, your insurance will be required to reimburse you for the water damage to your furniture, even though the damage would not have occurred absent the faulty roof. This is how the ensuing loss provision works.

However, the ensuing loss rule is not applicable if the ensuing loss is directly related to the excluded risk. Thus, for an ensuing loss to be covered, Florida courts hold that the loss must be separate from the excluded peril, but at the same time as a result of that excluded peril. In our example above, had the roof collapsed and it was the collapse that damaged the furniture, then the loss would be said to have been directly related to the excluded loss and the ensuing loss provision would not even apply.

It’s important to keep in mind that the exact scope of your coverage will depend on several factors including the specific facts of your case, the language in your policy, and even how liberal the court interprets the policy language. Certain language in your policy may affect your right to recover for ensuing losses. For example, an anti-concurrent cause provision may limit your right to recover for ensuing losses. An anti-concurrent clause typically provides that no coverage will be afforded when independent covered causes and non-covered causes in combination cause one loss that would not have resulted absent the two causes. Back to our faulty roof example, if the policy contained an anti-concurrent cause provision, then the policyholder would not be entitled to recover under the policy. Although the two causes are independent in this example (the rain and the faulty roof are not directly related), the water would not have damaged the furniture had the roof not been defective. The incorporation of the anti-concurrent clause provision in this scenario would bar application of the ensuing loss provision.  

The law in this area of insurance litigation is very sophisticated and requires careful inspection of the relevant policy, and a thorough understanding of the applicable rules in your particular jurisdiction. The difference between concurrent causes, anti-concurrent causes, ensuing losses and other similar terms are often very subtle but can often be the difference between recovering on your claim or not recovering anything at all. Insurance companies know how sophisticated these terms are so they draft these policies carefully to avoid having to pay out on claims as often as possible. Clearly, insurance companies have a strong interest in paying out as little as possible so that they may retain greater profits for their shareholders. When multiple causes are at play, these scenarios provide fertile grounds for insurance companies to deny claims.

Whether the denial is well-founded or not, you can expect that your insurance company will pay you nothing or less than you are entitled to when there are multiple causes involved, some of which may be covered and others which may not. Moreover, because these concepts are so complex, they are easily obfuscated in the minds of jurors. These concepts, and the facts that apply to them, must be carefully explained so that the trier of fact, typically a jury, can properly evaluate the merits of the claim. Without such clarity, the jury will simply be confused and more likely to reach an improper result. If you find yourself in a situation where you are met with friction from your insurance company you should consider hiring an experienced insurance claims attorney to help you through the process.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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