A Guide Through the “Legal Nebula” of Loss Causation
In-House Defense Quarterly
As highlighted by recent coverage disputes arising from Hurricane Katrina, loss causation is often a crucial coverage issue under property policies. This determination usually requires an analysis of complex factual and legal issues, which one frustrated judge described as a “legal nebula” in which “case precedents filled with the legal jargon of efficient proximate cause offer little guidance in the doctrine’s application and result.”
In this article, the authors seek to provide guidance on causation issues that often arise in first-party property claims by (1) clarifying what loss causation rules are applied in different jurisdictions; (2) analyzing policy terms addressing loss causation; (3) examining common factual scenarios in which causation coverage issues often arise; and (4) outlining issues to consider regarding loss causation.