In the context of California wildfire losses, California’s efficient proximate cause doctrine can play a significant role in the overall causation determination and, in turn, have significant coverage impact. For the efficient proximate cause standard to apply, there must be two separate or distinct perils, each of which could have occurred independently of the other to cause the loss for which coverage is sought (even if they did not in fact operate independently). Conversely, if the “efficient proximate cause” of the loss is excluded, there is no coverage. Under this doctrine, damage is covered (subject to policy terms) if a covered peril ( e.g., third-party negligence) is the “efficient proximate cause” of the loss even if an excluded peril ( e.g., soil subsidence) may have contributed to the loss. Where two or more causes of loss contribute to claimed damage in first-party property claims, California applies the “efficient proximate cause” doctrine in analyzing coverage. This article identifies some of these challenges and presents insurance industry underwriters with strategies for approaching these challenges. These wildfires also present unique challenges to both liability and property insurers that insure risk within the state. These wildfires wreak havoc on California’s communities, affecting both residential and commercial properties. ![]() ![]() In fact, since 2000, there has been an average of 8,304 wildfires per year in California, burning an estimated 928,245 acres every year. ![]() Exemplified by the 2017, 2018, and 2020 wildfire seasons, the number of wildfires in the last 5 years stands at a staggering 85,028 in the state of California alone. Wildfires in California are, unfortunately, burning as frequently and as ferociously as ever. To read this article in PDF format, please click here.
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