The Consumer Federation of America (CFA) is urging officials at New York’s governor, mayoral and municipal levels to take steps to ensure anti-concurrent-causation clauses (ACC) do not result in denying claims related to Sandy.
The CFA reports that 111 homes in Queens, New York were destroyed by a fast-spreading fire after Superstorm Sandy hit the east coast of the United States.
The federation has called on Governor Andrew Cuomo, Mayor Michael Bloomberg and Benjamin Lawsky, superintendent of the New York’s Department of Financial Services, to take immediate action to ensure claims for these and other homes harmed by fire, wind and flood are paid promptly.
ACC could result in denied fire, wind and flood claims, the CFA argues. The clauses “apply when a loss is caused by a combination of covered events, such as fire or wind, and non-covered events, such as a flood,” J. Robert Hunter, director of insurance at the CFA, explains in a federation statement.
Including an ACC in a policy means “insurance companies can deny an otherwise covered claim – like fire or wind – regardless of the sequence of events. They can also deny an otherwise covered claim even if both events are shown to have contributed to the loss at the same time,” Hunter contends.
By way of example, if the homeowner has in force a homeowner’s insurance policy, but not a flood insurance policy, “an ACC could result in denied claims for fire and wind damage, as well as flood damage,” he says.
Noting that about 70% of New Yorkers in flood zones do not have in place flood insurance, Hunter says this puts their claims (even for wind and fire) at risk.
ACCs were used following Katrina to deny numerous claims, the CFA reports. This spurred litigation – with separate rulings that ACCs were valid and enforceable; others that they were ambiguous and unenforceable – but little clarity.
“We call on state regulators to take action to help New Yorkers whose fire and wind-related insurance claims payments are at risk of denial due to an unfair and legally unclear clause buried in the fine print,” Hunter says.