Principles of Risk Management and Insurance, 13th Edition

Section I Exclusions

In addition to the specific exclusions previously discussed, several general exclusions appear in the policy.

Concurrent Causation Losses

The homeowners policy contains language that excludes concurrent causation losses. The exclusion means that if a single loss is caused by two or more perils that occur concurrently or in any sequence, and one peril is covered under the policy (e.g., windstorm) and the other peril is excluded (e.g., flood), the entire loss is excluded. The concurrent causation exclusion created serious loss-­adjustment problems when Hurricane Katrina occurred in 2005. Thousands of homes were damaged or destroyed by both windstorm and flood. Many insurers took the position that such losses were concurrent ...