Insurer’s Denial Based on “Anti-concurrent Cause” Provision Deemed Proper – Important Implications for All Massachusetts Property Insurers
The Massachusetts Supreme Judicial Court ruled in favor of defendant insurer in an action arising from the insurer’s denial of coverage for property damages caused by heavy rains and surface water runoff. The SJC decision upholds the validity and enforceability of anti-concurrent provisions and affirms an insurer’s denial of coverage where the underlying damage is caused by an excluded peril and a covered peril.In June 2009, heavy rains fell around the area of the insured’s property. Approximately thirty minutes after the storm began, water stopped flowing down a parking lot drain which had become clogged with debris. The heavy rains collected in the parking lot and seeped under the door of the insured’s building, flooding the lower level and causing $34,000 in property damage.The property owner, Surabian Realty Co., Inc., had a business owner’s policy with NGM Insurance Company. NGM denied coverage based on an exclusion for damage caused by surface water contained in the policy. Surabian filed a Complaint against NGM, alleging breach of contract, breach of implied covenant of good faith and fair dealing, and unfair or deceptive practices in violation of G.L. c. 93A and c. 176D.
Both parties filed Motions for Summary Judgment. The Superior Court granted NGM’s motion, finding that the damage was caused at least in part by surface water. Although damage was also partially caused by water that had backed up from a drain, the “anti-concurrent cause” provision of the policy excluded coverage for surface water “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”
Surabian appealed the judgment and thereafter sought direct appellate review, which was granted. Attorneys David Hassett and Scott Ober argued that the property owner’s claim was barred by the anti-concurrent cause provision in the policy. Surabian’s counsel argued that the policy language was ambiguous.
The SJC agreed with Hassett and Ober and held that NGM’s denial of coverage was proper based on its correct interpretation of the insurance policy and that the Superior Court judge had properly denied all of Surabian’s claims, including those under G.L. c. 93A and G.L. c. 176D. Judgment was affirmed in favor of NGM Insurance Company.