What Is an Ensuing Loss Clause?

Understanding the Ensuing Loss Clause in Insurance Policies

Ensuing loss is a term used in insurance policies to describe a covered loss resulting from an excluded peril. In simpler terms, it means that even if the initial cause of damage is excluded from your insurance policy, the damage that results from it may still be covered—if a covered peril causes that resulting damage.

Key Elements That Define Ensuing Loss Coverage

To determine if ensuing loss applies, insurers and courts evaluate:

  • Causation Sequence: The excluded peril must lead directly to a covered peril.
  • Distinct Peril: The ensuing loss must arise from a separate and independent cause listed as covered.
  • Proximate Cause Analysis: Jurisdictions vary in evaluating chains of events; some apply concurrent causation, others apply efficient proximate cause standards.

Ensuing Loss vs. Concurrent Causation: Know the Difference

While ensuing loss addresses resulting damage after an excluded peril, concurrent causation refers to losses caused by both excluded and covered perils co-occurring. Many policies now include anti-concurrent causation clauses, which attempt to eliminate coverage even when a covered peril plays a role.

It is vital to distinguish between these two concepts when preparing a claim. Courts treat them differently, and misclassifying could result in denied claims.

How Ensuing Loss Clauses Work 

To understand how these clauses work, it’s helpful to look at a real-world example:

Scenario:

  • A cast iron pipe deteriorates over time (an excluded peril like wear and tear).
  • The pipe bursts, and water damages walls, flooring, and electrical systems.

Even though wear and tear are excluded, the ensuing water damage might be covered because water damage from a sudden event is a covered peril.

The clause’s heart separates the initial excluded cause from the resulting covered damage.

Common Misunderstandings About Ensuing Loss

Many policyholders mistakenly believe that all resulting damage is covered. That’s not true. The ensuing peril must be separate and distinct, not just an extension of the original issue.

For example:

  • If poor design causes cracking, and the cracks worsen, it is still not covered.
  • But if that cracking causes a collapse, and collapse is covered, then ensuing loss coverage may apply.

Ensuring Loss Coverage in Different Policy Types

Homeowners Insurance:

  • Often includes ensuing loss clauses in HO-3 and HO-5 policies.
  • Standard exclusions apply, but resulting damage may still be covered.

Commercial Property Insurance:

  • Policies like CP 10 30 (Special Causes of Loss Form) also include similar language.
  • Coverage can hinge on specific business operations and systems.

Always verify whether your specific policy includes broad or limited ensuing loss protection.

Challenges Florida Policyholders Face 

Despite their intent, insurance companies frequently misapply or ignore ensuing loss clauses. Denials are often based on:

  • Mislabeling all damage as excluded
  • Arguing that the ensuing peril was not independent
  • Failing to perform adequate causation analysis
  • Denying based on “concurrent causation” theories

Policyholders must demand a full investigation, especially when visible secondary damage logically stems from a covered peril.

How Insurers Deny Ensuing Loss Claims

Insurers frequently attempt to deny these claims by:

  • Arguing the ensuing peril is not truly separate, but rather a natural continuation of the excluded event.
  • Applying anti-concurrent causation clauses that bar recovery if covered and uncovered perils contributed to the loss.
  • Claiming there is no independent intervening peril to trigger coverage.

These tactics often succeed when homeowners are unfamiliar with the policy language or fail to provide evidence of separate peril causation.

Why You Need Legal or Expert Help

Insurers often try to blur the line between the excluded cause and the ensuing peril. They may argue it’s all one event. An expert insurance claim attorney can help prove that the two events are separate perils in these cases.

They can also push back on wrongful denials and recover damages owed under the policy.

Why Ensuing Loss Can Be the Key to Claim Recovery

Ensuing loss provisions serve as a lifeline when your claim seems doomed by exclusions. Insurance companies often leverage exclusions to deny legitimate claims, but cannot ignore ensuing loss exceptions if the damage stems from a distinct, covered peril.

Homeowners must learn to recognize the difference between excluded causes and covered consequences. Proper documentation and expert insurance claim lawyers can transform a denied claim into a successful recovery.