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2 Problems = Zero Money: The Anti-concurrent Causation Clause

"Chances are you'll see it if you look hard enough," says William "Chip" Merlin, whose law firm helped win a key decision on Katrina coverage in Mississippi's state supreme court. "Check in the exclusions section of your contract."

The typical ACC clause reads like the one insurer Nationwide put into its policies and which Judge Senter called ambiguous: "We do not cover loss to any property resulting directly or indirectly from any of the following [excluded perils]. Such a loss is excluded even if another peril or event contributed concurrently or in any sequence to cause the loss."

Contractually speaking

Not only have ACC clauses been part of homeowners policies in recent years, they've also been expanded and the legalese surrounding them tightened because insurers have won court decisions elsewhere.

Consumer advocate Amy Bach, executive director of United Policyholders, a non-profit consumer organization, says, "We've won a couple of cases in state courts. But federal courts are generally more conservative and most of our wins were wiped out." In federal court a contract is a contract, plaintiffs' lawyers say, even if the homeowner didn't understand it.

Insurers also employ a "wearing-down effect." The effort needed to fight an anti-concurrent causation clause results in more hurricane victims, already suffering from the loss of their homes and financially strapped, choosing to settle rather than fight, particularly if they have to hire both a lawyer and a claims adjuster to prove that the wind came before the water.

"Litigants may not live to see their cases decided," said Philadelphia attorney Randy Maniloff in his analysis of the Mississippi cases.

Insurer vs. insured

Robert Hartwig, president of the Insurance Information Institute (III), which represents the property-casualty industry, says that without exclusionary clauses like the ACC rates would go up for everyone and availability of home insurance will decline. Insurers also lose "the benefit of certainty and predictability" in their calculation of future losses, according to one California case in which they were successful.

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