The Florida Supreme Court issued a favorable ruling for homeowners involved in an insurance dispute. In John Robert Sebo v. American Home Assurance Company, the Florida Supreme Court was asked to determine whether coverage existed under an all-risk policy when multiple perils combined to create a loss and at least one of the perils is excluded by the terms of the policy. The court concluded that coverage did exist in such a scenario. In other words, the Florida Supreme Court decided that insurance companies should not deny coverage for property damage just because it had more than one concurrent cause so long as the policy covers one of the causes.
To decide whether coverage existed under the policy, the Florida Supreme Court first had to determine which was the proper theory to apply, the Concurrent Causation Doctrine (“CCD”) or the Efficient Proximate Cause theory (“EPC”). Under the EPC, coverage exists for a covered peril setting into motion an uncovered peril, but not visa versa. Under the CCD, coverage exists where an insured risk constitutes a concurrent cause of the loss even where the insured risk is not the prime or efficient cause of the accident.
In this case, Sebos, an insured homeowner, had a policy which covered rain and hurricane damage but not damage from construction defects. His house was damaged during Hurricane Wilma because of the rain and construction defects.
The Court found that there was no reasonable way to distinguish the probable cause of Sebos’ property loss since the rain and construction defects acted in concert to create the destruction. It further stated that EPC should not be used because no efficient cause could be determined. Finally, the Court looked at the plain language of the policy and found that the Insurers did not write into the policy any clauses to explicitly avoid applying CCD. The policy’s plain language did not preclude recovery.
The Court also stated that the trial court can consider the amount of settlement as a post-judgement offset.
The dissent argued that the question of whether to apply CCD or EPC was not raised at the trial court or the Second District Court and so, the issue should not have been addressed.