Due to the nature of the region and the possibility that a major storm could hit the city of Orlando every year, many business owners have concerns relating to what may or may not be covered under their current policy. While some components of the storm, such as wind and rain, damage will be covered causes of loss, under a policy for commercial property building insurance in Orlando, they would not be compensated for damage resulting from a storm surge and flooding as these risks will likely excluded altogether.
State laws affect how coverage is determined
Many states have adopted an “efficient proximate cause” test to determine coverage when there is both covered and excluded perils contributing to a loss. However, this has no set meaning and courts may interpret the test differently. Some courts view it as “dominant” or “predominating” cause, while others might see it as the risk that sets other causes in motion. Without uniformity under state law, policyholders are left unsure as to whether their losses will be covered.
Provisions in some policies may complicate issues
Some policies contain what is known as an “anti-concurrent causation” provision, which provides that the insurance company will not pay for loss caused by an excluded peril, even if a covered loss contributes directly or indirectly or in any sequence to the loss. Through this clause, the insurance company may seek to avoid coverage entirely if there is even one potentially excluded cause responsible for the loss or damage. This enables insurance companies to contract around the efficient proximate cause doctrine.
Another complicating factor to the problem is the ensuing loss clause found in some policies, which reduces coverage for a loss from a covered peril that follows as a consequence of an excluded peril. For example, if a policyholder suffers loss from an excluded cause, (such as flood), but the building is consumed by fire shortly after, then the loss should be covered. With storms of significant magnitude, it is likely that insureds with such policy provisions will remain uncertain as to their coverage, at least until a more uniformed structure is implemented. Speak to an agent concerning your concern with your current commercial property building insurance in Orlando. It’s important to have the right policy in place.