N.Y. Assemblyman Takes Aim at Anti-Concurrent Causation Clauses

A New York State Assemblyman has introduced a bill that seeks to prohibit the insurers’ use of anti-concurrent causation (ACC) clauses in the state.

The bill, A07455, was introduced on May 17 by Assemblyman Phil Goldfeder (D-Rockaway Park).

“In the aftermath of Superstorm Sandy, many homeowners were surprised when insurance companies denied their claims for perils that should have been covered under the policy (such as windstorm damage) because the perils occurred at the same time as a flood, which is excluded under most homeowners policies. As a result, these homeowners found themselves without adequate insurance coverage at a time when they needed it the most,” according to the bill’s memo.

“This bill would rectify this by prohibiting insurance companies from denying claims under these circumstances,” the justification in the bill’s memo reads.

Assemblyman Goldfeder’s bill would prohibit insurance companies from denying claims that would normally be covered under the policy solely because a separate risk occurred at the same time or contributed to the loss but was not covered under the policy or was specifically excluded.

An anti-concurrent causation clause is a provision contained in many homeowners policies that states that if a loss is caused by two or more perils — one that is covered by the policy and one that is excluded — then the loss is excluded, regardless of which peril is the primary cause or whether the perils occurred concurrently or in a sequence, according to the bill’s memo.

Assemblyman Goldfeder’s district in Queens, New York City, includes neighborhoods such as Breezy Point, Howard Beach and Rockaway that suffered significant losses from Sandy.

A number of New York state legislators have expressed their concern regarding the ACC provision in the wake of Sandy. For example, New York State Assembly Speaker Sheldon Silver (D-Manhattan) said during the Feb. 26 public hearing on insurers’ response that “one clause seems to be the basis on which most insurance companies are denying claims, and that is this concurrent causation…It sounds like there’s something inherently unfair in that.”

At the February public hearing, Benjamin Lawsky, the superintendent of the state’s Department of Financial Services, also spoke about the ACC provision.

“We’ve worked very hard with many of the insurance companies to get them to give way on this a little bit and to be open to fairness,” he had said. “So we often had to, especially with sewer backup where you take an area like Canarsie (in Brooklyn), for example, where tons of individuals had sewer backup because of where they are in relation to the water and other things. And at the same time, they also got hit by the flood surge, which is not covered.”

Some of the insurers at the department’s pushing were willing to pay those claims, while others were not, Lawsky said. “If they get litigated, it’s a little unclear how things will shake out in New York, but it is, I think, for the future, something worth exploring about what we can do preemptively so at the very least people know what they’re signing up for when they have such clauses or possibly taking other action.”