Released: July 26, 2007

Consumer group blasts insurance ‘trapdoor’

Source: Rebecca Mowbray, Newhouse News Services

The Consumer Federation of America wants to prevent insurers from denying payment for damage covered by homeowners policies on the grounds that damage from other causes, such as flooding, occurred about the same time.

It is calling on insurance commissioners across the country to ban this approach, which some companies used to deny claims after hurricanes Katrina and Rita.

The denials came through the use of obscure language in insurance policies known as “anti-concurrent causation clauses,”’ which allow companies to deny coverage if a home is damaged by something that should be covered, such as fire or wind, around the same time that the home also is damaged by something that is not covered, such as flooding.

If a house sustained an inch of flood damage, for example, an insurance company could argue under its anti-concurrent causation clause that it’s not responsible for paying for roof damage.

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