New Jersey Introduces Legislation That Prohibits Anti-Concurrent Causation Clauses In Homeowners Insurance Policies

Last year, I wrote about a New Jersey federal court decision that involved an insurance policy’s anti-concurrent causation clause. An anti-concurrent causation clause bars coverage when two identifiable causes-one covered and one not covered-contribute to a single loss. In that case, the court dismissed the insured’s claim for damages to certain portions of the property, noting that federal and state courts in New Jersey have applied and enforced anti-concurrent causation provisions.

Favorably for policyholders in New Jersey, on January 14, 2020, a bill was introduced (S217) that would prohibit anti-concurrent causation clauses in homeowners insurance policies. The bill provides:

An insurer authorized to transact the business of homeowners insurance in this State shall not exclude coverage in a homeowners insurance policy for loss or damage caused by a peril insured against under the terms of the policy on the grounds that the loss or damage occurred concurrently or in any sequence with a peril not insured against under the terms of the policy. Any such provision to exclude coverage shall be void and unenforceable.

According to the bill’s Statement, homeowners insurance coverage controversies tend to arise with respect to anti-concurrent causation clauses in connection with water and wind damage from hurricanes and other extreme weather events. Currently, homeowners insurance companies are allowed to use these clauses in their policies with the result that, in situations where a covered cause of loss or damage occurs concurrently or in any sequence with a non-covered cause of loss or damage, coverage for the entire loss or damage can be excluded and claims can be denied. This bill would end that practice by prohibiting the use of anti-concurrent causation clauses in homeowners insurance policies and provide that any provision to exclude coverage would be void and unenforceable.

I will keep you updated on the status of the bill, as well as any other legislation that impacts policyholders in the three States I am licensed: New Jersey, New York, and Pennsylvania.