What Is an Ensuing Loss Clause?
Understanding the Ensuing Loss Clause in Insurance Policies
An ensuing loss clause, also known as a resulting loss clause, appears in many property insurance policies. It states that while specific causes of damage may be excluded, any subsequent loss resulting from those excluded causes may still be covered if it arises from a separate, covered peril.
Typical Wording Example:
“We do not insure for loss caused by wear and tear. However, any ensuing loss to covered property not otherwise excluded is covered.”
This means the initial cause might be excluded, but the consequential damage may still qualify for reimbursement if it results from a covered peril.
Standard Policy Language Example
“We do not cover loss caused by wear and tear, deterioration, or corrosion. However, if loss by a covered peril ensues, we will cover that ensuing loss.”
How Ensuing Loss Clauses Work in Practice
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.
This is the heart of the clause: separating the initial excluded cause from the resulting covered damage.
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, mainly when visible secondary damage logically stems from a covered peril.
The Role of Ensuing Loss in Denied Claims
Insurers frequently deny claims by pointing to an excluded cause. But many homeowners win appeals by citing ensuing loss clauses. If a covered peril caused the final damage, it may be payable.
For instance, if wear and tear caused roof failure, and a storm later caused water damage, the storm-related water damage could be covered.
How to Prove an Ensuing Loss in an Insurance Dispute
1. Independent Expert Evaluation
Engage a licensed contractor, engineer, or building consultant to:
- Document the timeline of damage
- Establish a separation between the initial cause and the resulting peril
- Link resulting damage to covered causes like water, fire, or collapse
2. Maintain Thorough Evidence
- Take timestamped photos and videos
- Preserve damaged materials if possible
- Keep receipts and inspection reports
- Request the insurer’s engineer report in writing
3. Legal Support from Our Expert Insurance Claim Lawyers
Florida insurance lawyers familiar with ensuing loss litigation can:
- Examine policy language for loopholes
- Cross-examine the insurer’s findings
- Argue for coverage based on ensuing peril doctrine
- File bad faith claims if denials are made without basis
Ensuing Loss Clauses Can Unlock Your Coverage
An ensuing loss clause can be your strongest ally when an insurer denies a claim based on an exclusion. By understanding how these clauses work, and how to prove resulting losses are distinct and covered, you can protect your rights and avoid financial hardship. When in doubt, consult with a qualified insurance claim professional to ensure you’re getting every dollar your policy promises.