Florida Supreme Court Determines Which Theory of Recovery Applies Under Insurance Policy When Both Included and Excluded Perils Converge to Cause Loss

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Sebo v. American Home Assurance Company, Inc., Case No. SC14-897 (Fla. Dec. 1, 2016)*

If your homeowner’s insurance policy includes coverage for rainwater damage but excludes construction defects, how should a court determine whether your loss is covered when your home suffers a loss where both factors clearly converge and act in concert and there is no reasonable way to distinguish which factor is the proximate cause?

In Florida, there have been two competing theories on how to determine insurance coverage when two or more perils converge to cause a loss and at least one of those perils is excluded from the insurance policy: the “concurring cause” doctrine and the “efficient proximate cause” doctrine.

The leading theory has been the concurrent cause doctrine, holding that coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or “efficient” cause. This doctrine has been applied in Florida since 1988 when it was introduced by the Third DCA in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988) (“Where weather perils combine with human negligence to cause a loss, it seems logical and reasonable to find the loss covered by an all-risk policy even if one of the causes is excluded from coverage.”).

In 2013 the Second DCA disagreed with the concurrent cause doctrine and applied the competing efficient proximate cause doctrine, holding that where there is a concurrence of different perils, the loss is attributable to the “efficient” cause (the one that set the other in motion). American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013). That case involved damage to Mr. Sebo’s home where rainwater, hurricane winds, and defective construction all acted in concert to cause the damage, but defective construction was excluded from the policy. In deciding to apply the efficient proximate cause doctrine, the Second DCA reasoned that “the concurrent causation analysis would effectively nullify all exclusions in an all-risk policy.”

The Second DCA’s application of the efficient proximate cause doctrine was adverse to Mr. Sebo, who petitioned the Florida Supreme Court to review the case.  The Supreme Court accepted jurisdiction based on the express and direct conflict between the Second DCA’s opinion and the Third DCA’s decision.

In its opinion on December 1, 2016, the Florida Supreme Court noted that there is no reasonable way to distinguish the proximate cause of Mr. Sebo’s property loss. “As such, it would not be feasible to apply the [efficient proximate cause] doctrine because no efficient cause can be determined.” The Supreme Court also disagreed with the Second DCA’s view that the concurring cause doctrine nullifies all exclusionary language.

The Florida Supreme Court resolved the conflict between the appellate districts by deciding that the concurring cause doctrine applied by the Third DCA in 1988 is the appropriate theory of recovery. “We conclude that when independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine.” Sebo v. American Home Assurance Company, Inc., Case No. SC14-897 (Fla. Dec. 1, 2016). Thus, the Florida Supreme Court quashed the Second DCA’s opinion and remanded the case for further proceedings where the court will apply the concurring cause doctrine.

*The decision is not final until determination of any timely-filed motion for rehearing.