Tropical Storm Irma inundated Georgia – from the coast through the Piedmont and up to the northwest part of the state. The storm left a trail of power outages, downed trees and power lines, and other damage.
As expected, the storm also produced floods, with claims to inevitably follow. Property insurance policies often contain standard flood exclusions. But such exclusions are not always applied by courts in the face of combined peril losses.
When confronted with combined peril losses, Georgia utilizes the “efficient proximate cause doctrine” (EPC doctrine), which is “well-grounded in Georgia jurisprudence.” Burgess v. Allstate Ins. Co., 334 F. Supp. 2d 1351, 1361 (N.D. Ga. 2003); Dunbar v. Davis, 32 Ga. App. 192 (1924). Courts across the country use varying terms to describe this doctrine – “efficient proximate cause,” “proximate cause,” “efficient cause,” “predominant cause,” and “moving cause.”
The EPC doctrine is utilized in Georgia “when two or more identifiable causes contribute to a single property loss – at least one of them covered under the policy and at least one of them excluded under the policy.” Burgess at 1360.
In Dunbar, the court explained that the efficient proximate cause is “the one that necessarily sets the other causes in operation. The causes that are merely incidental or instruments of a superior or controlling agency are not the proximate causes and the responsible ones, though they may be nearer in time to the result.” Dunbar at 193.
So, under this rubric how does coverage apply to combined peril losses? Under the EPC doctrine, the efficient cause—the one that set the other in motion – is the cause to which the loss is attributable. Thus, there is coverage where a covered peril sets into motion an uncovered peril but not vice versa.
In Burgess, the insured submitted claims for water damage and mold infestation but the policy contained an exclusion for mold-related damage. Burgess at 1356-57. The court examined whether water (a covered cause) was the proximate cause of the entire loss, even though mold (an excluded cause), also contributed to the loss. Id. at 1361. The court explained that, “[w]hen an insured can identify an insured peril as the proximate cause, then there is coverage even if subsequent events are specifically excluded from coverage.” Id. at 1360.
In Travelers Indemnity Company v. Wilkes County, the insured’s courthouse roof was destroyed by fire and a temporary roof was installed. Thereafter, a windstorm caused one of the walls to break above the temporary roof and the wall suffered a partial collapse. The policy covered windstorm losses. Applying the EPC doctrine to find coverage, the Georgia Court of Appeals found that there was sufficient evidence that the windstorm was the efficient cause of the loss even though other causes may have contributed (i.e. weakening of the wall by the fire). In other words, the loss would not have occurred but for the windstorm.
As the court in Burgess acknowledged, other jurisdictions permit parties to contract around the EPC doctrine. Burgess at n. 4. For example, in a case under Florida law, the Eleventh Circuit Court of Appeals held that the EPC doctrine was not to be applied in the face of “unambiguous language” prohibiting its application. Empire Indem. Ins. Co. v. Winsett, 2009 U.S. App. LEXIS 9719, at *6 (11th Cir., May 4, 2009).
In the absence of unambiguous policy language to the contrary, the EPC doctrine is the prevailing doctrine in Georgia for combined peril losses. As always, careful review of policy language and well-investigated facts are required in order to properly evaluate combined peril claims.
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