Frequent readers of the blog will appreciate that disputes involving the application of anti-concurrent causation language in the context of claims for flood or water damage have appeared with some frequency in recent years. This increased level of cases is due in large part to the damage caused by Hurricane Irene in 2011 and Hurricane Sandy in 2012. One frequently-litigated issue concerns what, if any, coverage is available under a policy with anti-concurrent causation language when a single indivisible loss is caused by a covered peril and an excluded peril. Recent decisions in New Jersey suggest a solid consensus that such a claim is not covered.

Rosa Pen, Inc. v. Selective Way Ins. Co., 2017 N.J. Super. Unpub. LEXIS 394 (N.J. App. Div. Feb. 21, 2017) is just such a case. The facts of Rosa Pen closely resemble the facts in Carevel, LLC v. Aspen American Ins. Co., 2016 U.S. Dist. LEXIS 157919 (D.N.J. Nov. 15, 2016), which I wrote about back in December. In Rosa Pen, the insured rental property was inundated with three feet of water during Hurricane Irene. The insurance company’s adjuster determined that a combination of surface water and water that backed up through the building’s drains was responsible for the damage. The insured’s policy contained a water exclusion with the typical anti-concurrent preamble that water damage “is excluded regardless of any other cause of event that contributes concurrently or in any sequence to the loss.” The water exclusion specifically excluded, among other water-based causes of loss, flood and sewer backup. Importantly, however, the insured’s policy had a separate endorsement that provided coverage for certain kinds of water damage, including loss or damage caused by sewer backup.

The insurance company denied the claim, citing the policy’s water exclusion. The insureds brought a declaratory judgment action, claiming that the water damage was caused solely by sewer backup. The trial court granted summary judgment for the insurer, finding that even if sewer backup did occur at the insured property during Hurricane Irene, the carrier had provided sufficient and undisputed evidence to demonstrate that the property was also damaged by surface water that infiltrated the property’s first floor. On appeal, the New Jersey Appellate Division affirmed. The court first found that the lower court correctly concluded that flood at least contributed to the loss, noting that the insureds “failed to provide any evidence disputing that a flood in part caused damage to the property.” Additionally, and while recognizing that the policy provided coverage for sewer backup, the court concluded that the anti-concurrent causation exclusion for water damage was not altered or superseded by any other form or endorsement. Because flood/surface water contributed in some measure to the water damage, the claim was properly denied.

Rosa Pen provides yet another instructive example of how an anti-concurrent causation clause can terminate a coverage dispute on a dispositive motion.

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