Chapter 2 Concurrent Causes
2.1 Concurrent Causes and Sole Cause
2.2.2 Concurrency between Insured Peril and Excluded Peril
Where there are two effective causes of the loss, one within the general words of the policy and one within an exception term, the exception prevails over the insured peril and discharges the insurer’s liability of indemnity. Per Lord Sumner in Samuel v Dumas,172 “where
a loss is caused by two perils operating simultaneously at the time of loss and one is wholly excluded because the policy is warranted free of it, the question is whether it can be denied that the loss was so caused, for if not the warranty operates”. The essential rationale in law
171 William Conant Brewer, Jr. “Concurrent Causation in Insurance Contracts”, Michigan Law
Review, June 1961, Vol. 59, p 1142
lies in the fact that the exception takes priority over the general words.173 Moreover, the
exclusion clauses in policies define the extent of the insurer’s liability of indemnity explicitly based upon mutual agreement. However, two different situations should be distinguished, namely, interdependent concurrent causes and independent combined causes, since it has been suggested and discussed that where two causes are independent of each other and cause part of the loss without the contribution of the other, the insurer will merely be found liable for the insured part. In contrast, in the event of real concurrent causes with an interdependent nature, for instance, in the Wayne case, the Judges unanimously agreed that the only way to give effect to the exclusion terms was by exempting the two causes altogether.174
It appears that the judicial inclination of English courts is to protect the expectation of the insurers in undertaking the liability of indemnity, compared with the courts in California where it was held in the case of two proximate causes, where one was insured against, that the insurer was liable regardless of the fact that the policy excluded liability for the other cause in a liability insurance dispute.175 However, the rule upheld by English courts is not to
be simply read in this manner. Conversely, the rule established in the Wayne case, although a liability insurance case, has provided a better solution for marine insurance cases.
In the first place, the argument in the rule is more connected to the nature of liability insurance, rather than a general question as to all insurance policies or even the judicial intentions.176 Per Judge Lucas, “Partridge never considered in what manner concurrent
causation could apply in the first party property insurance context”. Also, the scope of coverage and the operation of the exclusion clauses are to be treated differently in these types of policies accordingly, since property insurance are unrelated to establishing negligence for the purpose of assessing tort liability.177 It is interesting that the US courts
have shown reluctance in finding more than one proximate cause under property insurance covers as well, for instance, the California Supreme Court has never found that there can be concurrent legally causes of loss in a property insurance case,178 which is echoed with the
standpoint in Parks.179 Thus, it can be remarked that the argument on the opposite operation
established by the California courts should not be considered in general marine insurance cases. Moreover, Judge Clark in this American case dissented by taking the view that the
173 Rob Merkin, Marine Insurance legislation, (4th ed, Lloyd's List Group, 2010) 74 174 Supra 4, at 67, per Lord Denning MR
175 State Farm Mutual Auto Ins Co v Partridge 10 Cal3d 102(1973) 176 Supra 44, p 234
177 Bragg, “Concurrent Causation and the Art of Policy Drafting: New Perils for Property
Insurers” (1985) 20 Forum, p 386
178 Ibid p 389
179 According to Parks, in the event of two concurrent causes of a loss, the predominating
efficient one must be regarded as the proximate cause when the damage caused by each cannot be distinguished or segregated
excluded cause should stand out according to the obvious parties’ expectation from the principle of contract, which agreed with English law’s standpoint.
In particular, Roskill LJ in Wayne has concluded and emphasised that the law on exception clauses is the same both for marine and non-marine insurance. In the marine insurance context, majority of the policies, including hull policies and cargo policies, are property insurances. The parties’ agreement on coverage and exclusion is crucial in construing the policy and defining the insurer’s undertaking. The freedom of contract is the root of the policy. Ambiguity may exist where the wording or the definition of the excluded perils is unclear. However, whether the underwriter is liable in the event of concurrent causes with one excluded is not ambiguous. When the parties’ intention is clear and explicit, the courts should respect and comply with it. Accordingly, it is well established by law in the case of marine insurance that the exclusionary cause prevails so that the policy will not answer. A concern on fallacy has been presented in Colinvaux’s stating that if the excluded element discharges the underwriter under one policy, another underwriter based upon a different cover may take advantage of the other concurrent cause to defend him against the liability by applying this rule. Consequently, there is a gap between the mutually excluding policies, despite the fact that the assured attempted to obtain the most sufficient cover the risks. On the contrary, as above mentioned, the court concluded in Partridge that the coverage was available in both automobile and the homeowners’ policies, in spite of the exclusion against each other in policies in concurrent causation. Similarly, in Colinvaux’s, special attention has been drawn by the decision of the House of Lords in Fairchild v Glenhaven Funeral Services Ltd180 in respect of causation in tort, where there was no means to determine during
which employment the employee’s disease was caused on a balance of probability. All the employers involved under the employer’s liability insurances were held to be liable for the damage. Although the same risk has been covered in all policies of different periods respectively, and it has been ascertained that the insurer was not liable for the loss before the commencement of the policy even resulting from the insured risk, immaterial of it being uninsured or excluded risk, the Fairchild rule imposes upon the underwriter the obligation to undertake his apportion by equal division. The judicial protection of the employees is fairly obvious and apparent in this case, which abandons ordinary causation principles.181
Generally, damages occurring in tort law is divisible in some cases between different tortfeasors or even between the claimant and the defendant in terms of fault, whereas in the absence of double insurance, only the underwriter(s) in the policy undertakes liability in
180 Supra 163
181 Supra 82. The Fairchild liability is unique in the sense that no scientific evidence or
explanation is available for ascertaining which employment increased the risk and resulted in the broke out of the disease. The causation issue in this case is largely regarded as inventive.
marine insurance claims on the basis of a single causal link between the proximate cause and the loss. Tort law aims to penalise as many tortfeasors as possible so long as they are negligent or have fault in causing the damage in order to indemnify the innocent victim to the best extent. However, marine insurance seems more like a settlement of loss between the two parties. The insurer agrees to cover the entire loss caused by certain perils, and the assured agrees to bear the whole loss which he does not insure on his own. Therefore, more than one causal link may need to be established concurrently in one tort claim for the damage, as the liabilities may be divided and undertaken by more than one tortfeasor, and each link is confined to one of the specified defendants’ acts and the damage. However, liability under a marine insurance claim is not apportionable between the assured and insurer by weighing the insured perils and the others. Concurrent causes do not amount to identical meaning and no comparable rules can be borrowed in this respect under the two laws.
Had the Partridge rule or the Fairchild rule applied, the concern over the excessive pressure put on the assured would be dispelled,182 since the insurer could not escape liability on the
ground of exclusion. However, on the contrary, the insured would be encouraged to conclude only one policy to covering more risks than agreed dispense with more policies in applying Partridge rule, which is likely to exert more unfavourable impact on the insurance industry both in commercial and legal sense. Moreover, applying the Fairchild rule in insurance law would increase the communications and disputes between the insurers. Being well established and recognised, the Fairchild rule becomes highly important for businessman; the policy, as a type of contract, is subject to the terms mutually agreed by the parties. The concern can be perfectly resolved by virtue of freedom of contract, without the need for law. Thus, the extent of coverage and exclusion can be delicately phrased and worded in order to fulfil the blank coverage between the policies. In particular, a term dealing with concurrent causes can be introduced into the policy in order to ascertain the allocation of the risk and the liability of the insurer.