New Hampshire Gives Effect To Anti-Concurrent Causation Wordings
Not one to get left behind while the Fifth Circuit and other Gulf Coast states make all the first party law on concurrent causation, the New Hampshire Supreme Court has issued a new opinion upholding a flood exclusion in a homeowner's policy.
The claims in Bates v. Phenix Mut'l Ins. Co., 2007-177 (N.H. February 18, 2008) involved damage to the insured's real and personal property after a culvert above the insured's house gave way following a period of extremely heavy rain, deluging the insured's property. Phenix Mutual denied coverage on the basis of the flood exclusion in its policy, a position that was upheld by a state trial court in the ensuing coverage liltigation.
On appeal to the New Hampshire Supreme Court, Bates argued that the failure of the culvert and the resulting collapse of the roadway was a covered "explosion" under the policy because it was caused by a "sudden release of energy in the form of movement of water." The trial court had rejected this argument but further found that any resulting coverage was defeated by the water exclusion in the policy. The Supreme Court agreed.
Exclusion G to the policy stated that the policy excluded "loss or damage caused directly or indirectly" by water "regardless of any other cause or event that contributes concurrently or in any sequence to the loss." Since the insured conceded that water was at least an indirect cause of this loss, the Supreme Court declared that Exclusion G barred coverage.
Further, the court refused to find that the release of water caused an explosion within the ensuing loss provision of the exclusion. The Supreme Court agreed with the trial court that applying "the ensuing loss provision to provide coverage for what is essentially a flood would subvert the intent of the parties." In any event, the court observed that the actual damage complained of by the insured was not for damage due to an explosion (e.g. flying rocks or debris).
