What is causation in insurance?


Editorial team Published on

Causation in insurance is the rule used to decide if an insurance company must pay for a loss based on what event caused it.

Basic Rules of Causation

  • Covered Peril: The event that damages property must match a risk listed in the policy.
  • Proximate Cause: Courts often look for the main or dominant cause of the loss, not just the last event in time.
  • Burden of Proof: The policyholder must show a covered event caused the damage. The insurer must prove that an exclusion applies.

Concurrent Causation

  • Multiple Causes: This happens when two or more events happen at the same time or one after another to cause a single loss.
  • Covered and Uncovered: One cause has policy coverage, but the other cause is excluded.
  • Example: High winds blow a door open during a storm, and floodwaters ruin the lobby floor. Wind is covered, but flood is excluded.

Anti-Concurrent Causation (ACC) Clauses

  • Contract Limits: Most modern policies use Anti-Concurrent Causation Clauses to overrule old court rulings.
  • Exclusion Wins: If an excluded event (like a flood or earthquake) contributes to the damage, the ACC clause lets the insurer deny the whole claim.
  • Common Exclusions: ACC language often applies to water, earth movement, mold, and government actions.