Since the Florida’s Supreme Court issued their opinion late last year in Sebo v. American Home Assurance Co., many insurers have faced serious and often case-fatal issues involving what the insureds need to prove to establish a prima facie case for breach of contract in homeowners cases. 208 So. 3d 694 (Fla. 2016).

First, one should consider who has the burden of proof in a claim under an all-risk policy. To prove a breach of contract claim under an all-risk policy, Florida courts have held that once the insured has established a loss “within the terms of an all ‘risks policy,’ the burden shifts to the insurer to prove that the loss arose from a cause which is excepted.” Hudson v. Prudential Prop. & Cas. Ins. Co., 450 So. 2d 565, 568 (Fla. 2d DCA 1984) (citing Jewelers Mut. Ins. Co. v. Balough, 272 F.2d 889 (5th Cir. 1959); Phoenix Ins. Co. v Branch, 234 So. 2d 396, 398 (Fla. 4th DCA 1970); Oaks Unit Ill Condo. Inc. v Allstate Ins. Co., 8:10 CV-309-T-26TBM, 2011 WL 67971 (M.D. Fla. Jan. 4, 2011).

Although several courts have rendered opinions that seem to impose a less stringent burden on the plaintiff, such as requiring the insured to prove only the loss or damage to their property occurred while the policy was in effect, the loss still must fall within the policy’s coverage before the insurer is obligated to prove that an exclusion under the policy applies. See Mejia v. Citizens Prop. Ins. Corp., 161 So. 3d 576, 578 (Fla. 2d DCA 2014), Citizens Prop. Ins. Corp. v. Munoz, 158 So. 3d 671,674 (Fla. 2d DCA 2014).

Other courts have been more precise in articulating this type of qualifying language. See W. Best, Inc. v. Underwriters at Lloyds, London, 655 So. 2d 1213 (Fla. 4th DCA 1995) (stating “[s]ince in the instant case it was undisputed that the loss of the ring apparently fell within the terms of the all-risk policy, appellee bore the burden as insurer to establish that the circumstances of the loss fell within an exclusionary provision”); Banco Nacional De Nicaragua v. Argonaut Ins. Co., 681 F.2d 1337. 1339-40 (11th Cir. 1982)(holding that "[t]he plaintiff in a suit under an all-risks insurance policy must show a relevant loss in order to invoke the policy, and proof that the loss occurred within the policy period is part and parcel of that showing of a loss”). Therefore, until the insured demonstrates at least a prima facie claim of loss under the policy, the burden does not shift to the insurance carrier to prove that the loss in question is otherwise excluded.

In many cases, it appears that the loss for which the claim is made was caused, in part, by an insured peril, and, in part, by an uninsured peril. In such cases the burden is upon the insured to show how much of the loss resulted from the covered peril. If the insured is unable to meet this burden, he or she will not be entitled to recover under the policy.

It has been argued that when an insured peril combines with an uninsured peril to produce a loss, the insured is entitled to recover under the policy. However, it has also been held that when the proximate cause of the loss is not a covered peril, then there can be no recovery under the policy.

In Sebo v. American Home Assurance Co., the court interpreted a policy that lacked anti-concurrent cause language, rather than a standard form homeowners insurance policy. 208 So. 3d 694 (Fla. 2016). The court made clear that anti-concurrent cause language is enforceable, thereby limiting the opinion’s application to standard form homeowners policies which typically contain such language.

In other words, the opinion in Sebo, is limited to cases where the insurance carrier does not specifically avoid the application of the concurrent cause doctrine in the plain language of the policy and in cases when there is no dispute as to the multiple causes of the loss.

In many other cases with the standard homeowners form, the policy specifically avoids the application of the concurrent cause doctrine under the exclusion section. The Section 1- Exclusions portion of the policy states in part:

1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.
 

The opinion clearly distinguishes between policies which include this language as noted above and those that do not, such as the policy in the Sebo, case.

Additionally, in many other cases, unlike Sebo, the parties are disputing the cause of loss. In those cases, the plaintiff will try and argue that all damage to the property was the result of “a peril created opening,” while the insurer will argue that the damage was the result of wear and tear, deterioration, long term, and a pre-existing condition.

In Sebo, the jury was asked to determine whether there was coverage for the insured’s loss under the policy, given the multiple causes of loss and stated the following:

Also not in dispute is that the rainwater and hurricane winds combined with the defective construction to cause the damage to Sebo’s property. As in Partridge, there is no reasonable way to distinguish the proximate cause of Sebo’s property loss—the rain and construction defects acted in concert to create the destruction of Sebo’s home. As such, it would not be feasible to apply the EPC doctrine because no efficient cause can be determined. As stated in Wallach, “[w]here 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.” Wallach, 527 So.2d at 1388. Furthermore, we disagree with the Second District’s statement that the CCD nullifies all exclusionary language and note that AHAC explicitly wrote other sections of Sebo’s policy to avoid applying the CCD. Because AHAC did not explicitly avoid applying the CCD, we find that the plain language of the policy does not preclude recovery in this case.”
Id. at 700 (emphasis added).

The importance of policy language which Florida law demands be construed strictly, cannot be understated in cases involving more than one cause of loss. This notion is exemplified in Empire Indem. Insurance Co. v. Winsett, where applying Florida insurance law, overturned the lower court’s decision and relied on the efficient cause doctrine. 325 F. App’x 849 (11th Cir. 2009). It did so, however, due to the policy language and not in order to apply the concurrent cause doctrine. On appeal, the 11th Circuit Court found the application of the efficient cause doctrine erroneous. Specifically, the court found that “’the efficient cause doctrine cannot be incorporated into an insurance policy if doing so would render part of the policy meaningless.’” Id. at 851 (citing Arawak Aviation Inc. v. Indem. Ins. Co. of N. Am., 285 F.3d 954, 958 (11th Cir.2002)). As a result, the court reversed the decision that held the insurer liable for coverage, finding that the district court had overlooked the unambiguous policy language when it applied the efficient cause doctrine. Furthermore, the court explained that:

The policy plainly excludes coverage for mold ‘regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.’ By the plain language “in any sequence,” the policy was written to exclude applying the efficient proximate cause doctrine. Overlooking that plain language, the district court erroneously concluded that the efficient proximate cause doctrine applies and triggers Empire’s duty to defend and indemnify Preserve.
Id. at 852 (emphasis added)(internal citation omitted).
 

The insurance industry refers to the type of clause in the Winsett policy exclusion as an "anti-concurrent causation" clause. This clause avoids the effective cause/concurrent cause issue because it provides contractual language limiting coverage if other causes are concurrent. Thus, the loss resulting from a combination of a covered loss and non-covered loss is excluded under the policy, as long as the exclusion includes anti-concurrent causation language. Therefore, though Sebo stands for Florida’s adoption of the concurrent cause doctrine, a more accurate reading of the case, especially if read in conjunction with Winsett, is that it stands for the adoption of the concurrent cause doctrine if there is no anti-concurrent causation language in the policy.

As a result of the Sebo case, as it pertains to burdens of proof, a jury will have to apply the efficient proximate cause doctrine to determine which peril was the most substantial and reasonable factor in the loss. The insured then has the burden to prove a covered peril was the efficient proximate cause and the insurer must prove an excluded or excepted peril was the efficient proximate cause. Citizens Prop. Ins. Corp. v. Salkey, 190 So. 3d 1092 (Fla. 2d DCA 2016); Wallach v. Rosenberg, 527 So. 2d 1386, (Fla. 3d DCA 1988).

If there is no anti-concurrent language in the policy and the concurrent cause doctrine applies, a jury may find coverage for a multiple loss regardless of exclusion or exception from coverage. The insured then must show that any of the independent perils is the cause of the loss. The insurer essentially has the burden to show that none of the independent perils caused the loss.

As a result of recent case law, as noted above, whether coverage exists must begin with the language of the policy. Insurers should use Motions for Summary Judgment or Declaratory Action, to establish the nature of the perils and the presence of anti-concurrent policy language, should the nature of the suit call for application of the concurrent cause doctrine.

For more information/questions, please contact Nicole Ellis and/or Amy Melia.