Here’s a great piece in the Houston Chronicle by Prof. Seth Chandler of the University of Houston Law Center that raises a number of provocative points about the above question.
The issue Prof. Chandler raises that catches my eye the most is what effect Katrina cases will have on the wording of insurance policies, particularly the anticoncurrent cause clause. In one of the Katrina cases, Tuepker v. State Farm, the insurer requested and received permission for an interlocutory appeal of federal judge L.T. Senter Jr.’s denial of its motion to dismiss. Here is a pdf of Judge Senter’s ruling granting the appeal (an interlocutory appeal is one that comes before the case is over). The first briefing on this case is due in the Fifth Circuit Court of Appeals late this month.
What I found interesting about Senter’s opinion is that it says State Farm’s position on the anticoncurrent cause clause is not as hard-line as to say that the clause precludes coverage of wind damage merely because flood waters later would have destroyed the property. Instead, it characterizes State Farm’s position as mainstream: the clause is meant only to make sure uncovered causes cannot become covered through some chain of events, not to take away coverage for damage that is covered merely because some supervening uncovered event comes along. (Think of a supervening event this way: you are not to blame for eating all the cookies in the cookie jar, because your brother later smashed the jar while playing baseball in the house, and the cookies would have been destroyed anyway).
The State Farm position stated in Judge Senter’s ruling is in line with many explanations you will find of the reason for the origins of the anticoncurrent cause clause, and State Farm essentially says that Senter found an ambiguity based on an interpretatation of the clause that the insurer did not advocate. So I’m going to be really eager to read State Farm’s brief when it gets filed with the Fifth Circuit.
The trouble with rewriting any policy language, of course, is whether an insurer is buying more trouble, or whether it should count itself lucky that the language is enforced as written in many jurisdictions and leave it alone.
UPDATE: I fixed language in the fourth paragraph to state my point about State Farm’s position on ambiguity more plainly.