The Washington Supreme Court recently extended the efficient proximate cause doctrine – commonplace in first-party insurance – to a commercial general liability (“CGL”) pollution claim. In doing so, the court determined that the negligent installation of a water heater, rather than the carbon monoxide emitted therefrom, was the proximate cause of injury and could not be excluded via a pollution exclusion.
Describing the rule of efficient proximate cause, the court explained that there is coverage “where a covered peril sets in motion a causal chain, the last link of which is an uncovered peril …. If the initial event … is a covered peril, then there is coverage under the policy regardless whether subsequent events within the chain, which may be causes-in-fact of the loss, are excluded by the policy.”
This decision is a momentous win for policyholders. Following the court’s analysis to its natural extension, this analysis calls into question many standard exclusions in a CGL policy. Insurers will need to think carefully before denying a defense under a CGL policy when there is a legitimate claim that the predominant cause of an injury or damage was something earlier in the chain of causation than the later excluded event.
The case is Xia v. ProBuilders Specialty Ins. Co., No. 92436-8 (Wash. April 27, 2017). Click here to read our more detailed case alert.
May 12, 2017
William S. Bennett