Montana Federal Court Upholds Application of Anti-Concurrent Causation Clause

Tred R. Eyerly | Insurance Law Hawaii

   Interpreting Montana law, the federal district court found that the policy’s anti-concurrent causation clause prevented coverage for the insured’s damaged home. Ward v. Safeco Ins. Co. of Am., 2021 U.S. Dist. LEXIS 149051 (D. Mont. Aug. 9, 2021).

    Plaintiff was advised by her tenants that water was bubbling up from the ground. It was determined that water was leaking from a main pipe serving the property. Subsequently, this old pipe was abandoned, left in the ground, and replaced with a new pipe in a new path with new excavation. Nevertheless, the insured reported the incident to her agent under her Landlord Protection Policy issued by Safeco, but reported there was no damage to the property. 

    Two months later, it was discovered a pipe burst again. The insured called her agent, who maintained the loss would not be covered, but agreed to submit a claim to Safeco. Safeco hired an inspector. A report stated that a portion of cracks found in the concrete perimeter of the home were not new and that the shape of the structure on which the house sat could explain their presence. The report noted that new cracks in the foundation could have been caused by a lack of care to make sure that the foundation was sufficient supported by consolidated soil during the excavation of the new water line. Based upon this report, Safeco denied coverage based upon the earth movement and water damage exclusions.

    The insured sued and Safeco moved for summary judgment. The insured argued that the loss was covered pursuant to Montana’s proximate cause doctrine, which mandated coverage for excluded events when those events were caused by a covered peril. The policy, however, had an anti-concurrent causation clause that Safeco argued defeated the insured’s argument. The clause stated that it would not cover “loss caused directly or indirectly by way of the following exclusions regardless of any other cause or event construing concurrently or in any sequence to the loss.” Prior Montana case law had upheld a similar anti-concurrent causation clause. 

    The insured’s bad faith claim was also rejected and summary judgment was granted to Safeco.

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