State Farm and homeowners Ray and Marie Van Meerten, in what is said to be the first Katrina case in Mississippi state court to go to trial, settled last week before a jury verdict was returned. As usual, terms were undisclosed. This case featured an interesting bit of testimony by a State Farm claims adjuster. Read this excerpt from an excellent story by Anita Lee of the Sun Herald:
A great fuss has been made over State Farm’s wind-water protocol and whether the company circulated it through the ranks to wrongly deny or minimize Hurricane Katrina claims.
But one catastrophe team leader, who managed adjusters for the company, said she’d never heard of the protocol, much less seen it.
Circuit Judge Steve Simpson questioned team leader Sharon L. Collins out of the jury’s presence to make sure, but she stuck to her statement. Collins said she deployed short term to the Coast after Katrina and worked here as a team leader for 60 days.
The protocol says when wind acts concurrently with flooding to cause damage, there is no coverage under State Farm policies. "In this storm, they didn’t act at the same time," Collins said. "I’ve never had claims where they acted concurrently."
She was asked if wind-driven rain soaked a couch and it was flooded, would the loss be covered. "Yeah," she said, "I guess it could be."
She was later shown a State Farm operations guide that said if an excluded peril, in this case water, caused or simply contributed to the loss – regardless of the sequence of events – "coverage will not apply to any portion of the loss."
"I don’t remember reading this before," said Collins. "I don’t have these memorized. I learned to look for coverage, so if I could prove there was wind damage to the couch, I would pay for it."
Although the central point of this excerpt is that Collins said he hadn’t heard of the fabled State Farm wind-water protocol, frequently cited by policyholder attorneys as evidence of the insurer’s determination to deny even legitimate wind claims, I found the last four paragraphs more interesting. This is exactly what I’ve been saying for many months — in almost every Katrina case, anti-concurrent cause language is not implicated because wind and water acted as separate causes of distinct damage. Therefore I don’t see any contradiction between the State Farm operations guide cited and Collins’ testimony — the State Farm anti-concurrent language says that flood damage will not be covered regardless of whether it occurred concurrently or in sequence with covered damage. It does not say that covered damage will not be covered regardless of whether it occurred concurrently or in sequence with uncovered damage.
The example of the couch, then, is entirely right, as was Collins assessment of adjusting the damage. Merely because flood later damaged property that had been damaged previously by a covered force does not mean the prior damage and the wind loss failed to happen.
The trouble many people have in understanding anti-concurrent language is more because of its name than the actual theory behind it — it sounds as if it concerns things that take place close in time or at the same time, but this is not necessarily so. Take one of the landmark cases on concurrent cause theory, Partridge v. State Farm, California Supreme Court, 1973. In that case, two negligent acts — filing a gun mechanism to create a hair trigger and careless driving over bumpy ground — combined to cause the gun to go off and shoot a passenger. The acts themselves took place a considerable span of time apart. However, the harm that occurred would not have happened unless each act took place. Those truly are concurrent causes, in that they combined to create one harm. Say rain inundates a couch, effectively ruining it, then two seconds later flood comes along and covers it. If you could prove what happened, the rain and flood are not concurrent causes of the couch’s damage. It was already destroyed by a covered cause when the flood came along. Say the couch was only 50 percent ruined by the rain. That 50 percent was not caused concurrently by flood and is covered. The other 50 percent is not.
The "in sequence" language also is a hang-up to many, but in the couch example, the damage is not sequential as that term is used in this context. Sequential causes are where one cause starts another in motion, like dominoes: for example, a lightning strike causes an earth slide. The causal relationship is dependent — one thing leads to another. In the couch example, the rain did not cause the flood.
If you want to read more, here is a story by Lee about the settlement of the case, and here is a story from earlier in the week about the trial.