Applying the Independent Concurrent Cause Rule
An insurance company’s obligations to its insureds can be unclear when the facts surrounding a loss signal both a covered risk and an excluded risk. Consider the following scenario:
An insured owns a stable that accumulates snow on its roof throughout the winter. Late into the winter months, a large storm strikes the barn’s location and heavy snow and winds are reported. The stable collapses. The stable is insured for all damage caused by wind, excluding damage caused by the weight of ice and snow. During the insurance company’s investigation, it learns that the combined forces of wind and snow caused the collapse.
Is there coverage?
This is precisely the type of scenario contemplated when Wisconsin enacted and adopted the “Independent Concurrent Cause” rule. The “Independent Concurrent Cause” rule was created to ensure that insureds are afforded coverage caused by any risk for which a premium was paid. However, application of the Independent Concurrent Cause rule is limited to those situations where the covered risk provides the basis for an independent cause of action. As demonstrated in the cases below, determining whether a covered risk is sufficiently independent to trigger this rule can be particularly difficult when it is not clear if a loss would have happened independently of the occurrence of an excluded risk. Further, one must consider whether the policy at issue contains a valid anti-concurrent cause provision sufficient to preclude coverage in concurrent cause situations.
The History of Wisconsin's "Independent Concurrent Cause" Rule
Prior to 1976, the law in Wisconsin was that where an insured peril was the proximate cause of a loss and an excluded peril was a contributing cause to that same loss, an insurance policy did not provide coverage to the loss. This changed when the Wisconsin Supreme Court decided Lawver v. Boling.
Lawver dealt with an insured seeking coverage for injuries sustained by his son-in-law caused by a motor vehicle while performing work on the insured’s farm. An applicable personal automobile policy provided coverage for any amount for which the insured became liable as a result of bodily injury arising out of the “ownership, maintenance or use” of an automobile, but excluded injuries to any employee of the insured arising out of and in the course of employment with the insured. Similarly, an applicable farmowners policy provided coverage for any amount for which the insured became legally obligated to pay as damages, but excluded those damages arising out of the use of an automobile. There was a question of fact as to whether the injury was caused by negligent construction of a lift, negligent operation of a truck controlling the lift, or both. The Lawver court concluded neither insurer could be excused from their respective duty to defend or pay benefits until it was determined that the loss did not result, even in part, from a risk for which it provided coverage and collected a premium. Under Lawver, an insurer is obligated to pay for any loss caused in whole or in part by a covered risk. This became known as the “Independent Concurrent Cause” rule (the “Rule”).
The Rule was later expanded to the first-party property damage context in Kraemer Bros. v. U.S. Fire Ins. Co. There, the court held that if it is proved that an excluded peril is not the sole cause of a loss, the insurer is liable under its policy:
Where a policy expressly insures against loss caused by one risk but excludes loss caused by another risk, coverage is extended to a loss caused by the insured risk even though the excluded risk is a contributory cause.
In 1982, the Wisconsin Court of Appeals decided Benke v. Mukwonago-Vernon Mut. Ins. Co. In Benke, an insurance company insured a stable on a defined-peril basis, which included coverage for windstorm damage, but excluding damage caused by weight of ice and snow. The stable collapsed during a wind event one February while there were six to eight inches of snow on the stable roof. The insurance company denied the claim contending the collapse was caused by the weight of ice and snow. The insureds took the position that the collapse was caused by wind and sued the insurance company for breach of contract and bad faith. The jury concluded that wind caused the collapse and the insurer committed bad faith by denying the claim. One of the issues on appeal was whether the jury was properly instructed on the law. The jury was instructed:
if there is a peril which is included in the policy (wind) and a peril which is excluded from the policy (snow and ice) and the jury believes the two perils worked together to cause the building to collapse, then the jury must find the damages were covered under the policy.
Therefore, the jury was told that if wind is a cause of the collapse, the question of whether wind directly caused the collapse must be answered ‘yes.’
Rejecting the insurer’s argument that the Rule did not apply or was limited to “all-risk” policies rather than the defined-peril policy at issue, the Benke court reasoned that the language in both Lawver and Kraemer Bros. broadly declared that if any evidence existed that any included peril was a cause of damage, then it is assumed the insured paid to be protected from that loss and it would be unfair to deny those benefits as paid for. Simply put, the Rule stated that where an uncovered peril and a covered peril simultaneously caused a loss, coverage extended to that loss.
When the "Independent Concurrent Cause" Rule Applies
Shortly after Benke was decided, the Rule reached its limitations. In Bankert by Habush v. Threshermen’s Mut. Ins. Co., the Wisconsin Supreme Court clarified that the Rule did not apply where an excluded risk led to a covered occurrence. In Bankert, Mueller, a minor child, crashed his motorcycle into a parked car injuring Bankert, his passenger. Bankert’s parents sued Mueller’s parents and the Muellers’ insurer under theories of negligent entrustment and supervision. The Bankerts’ argued that while the farmowners insurance policy excluded coverage for loss arising out of the operation of an automobile away from the premises, the initial negligent entrustment or supervision occurred on the premises and fell within the policy’s initial grant of coverage for bodily injury liability. The trial court found that no coverage was afforded on the cause of action for negligent entrustment, but was afforded on the cause of action for negligent supervision. Both parties appealed and the appellate court found no coverage under either theory of negligence. The Bankert court concluded the insurance policy at issue insured against “occurrences” rather than theories of liability. It distinguished the case from Lawver and the Rule because the cause of the accident was not germane to the issue in the case. Rather, the case turned on the plain language of the exclusion, which demonstrated that all conceivable coverage was excluded when an automobile accident resulting in bodily injury took place away from the premises.“Driving ‘away from the premises’ was the excluded risk, and the parents’ negligence depended on that excluded risk to be actionable.”Put differently, the Bankert court held that in order for the Rule to apply, an independent concurrent cause must provide the basis for a cause of action by itself and must not require the occurrence of an excluded risk to make it actionable.
Bankert did not overrule or modify the Lawver or Benke decisions. Instead, it recognized that an excluded act of negligence that provided the basis for a covered act of negligence did not invoke the Rule as set forth in Lawver. Wisconsin courts have held to this distinction. Accordingly, the Rule does not apply in instances where an excluded action or event leads to a covered occurrence.
The Rule’s boundaries are best illustrated in Estate of Jones ex rel. Demet v. Smith. In Estate of Jones, a van driver for a daycare provider negligently left an infant in his van during warm weather. Even though the infant was expected at daycare, none of the daycare employees inquired as to why she was not present that day. Only after the infant’s mother arrived to pick her infant up from daycare did they search for her. The infant was found dead in the van. The infant’s estate brought a negligence action against the daycare and its insurer. The daycare’s CGL policy included general liability language, but excluded liability arising out of the use of a vehicle, such as the van. The insurer argued Bankert and Smith compelled the conclusion of no coverage because the covered risk (the negligence of the staff) required the occurrence of an excluded risk (use of the van).The court rejected this argument, holding that each risk was independent because, even though the driver’s negligence preceded the staff’s negligence, it did not contribute to the staff’s negligence. The van driver owed a duty to ensure that all children arrived at the daycare safely. However, the daycare staff owed an entirely independent duty to ensure that all expected children arrived at the daycare regardless of the method of their arrival. Thus, there existed two independent concurrent causes that led to the harm. The factual scenario presented in Estate of Jones differed from each of the cases applying Bankert in that the covered risk of staff negligence did not require that the van driver’s negligence be actionable or even exist, whereas the other cases involved harms that would not exist absent the occurrence of an uncovered peril.
To date, no Wisconsin court has expressly altered, limited, overruled or otherwise modified the holdings of Lawver, Kraemer Bros. and Benke. Indeed, Benke has been cited as recently as 2011 for its bad faith analysis encouraging insurers to seek multiple expert opinions when prior investigation has yielded a debatable issue, absent any indication that decision has been overruled or abrogated on other grounds. Therefore, the law in Wisconsin remains that an insurer owes its insureds an obligation to pay for losses caused in whole or in part by a covered peril. Such obligations are only defeated upon a showing that an excluded peril was the sole cause of the loss (that is, a covered risk did not independently occur). Alternatively, an insurer may include anti-concurrent language sufficient to preclude coverage in these situations.
Anti-Concurrent Cause Provisions
An insurance company is relieved from its obligation to an insured if the claimed loss was caused solely by an excluded risk or in the presence of an anti-concurrent cause provision. An anti-concurrent cause provision explicitly excludes a risk regardless of whether any other risk—including a covered risk—contributes to the loss. There is minimal guidance on what language is required to constitute a valid anti-concurrent cause provision. In Am. Motorists Ins. Co. v. R & S Meats, Inc., the Wisconsin Court of Appeals briefly considered whether the policy at issue contained valid anti-concurrent cause language. The policy at issue stated:
We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
The court held that the emphasized language barred coverage in an overlap situation like that in Kraemer Bros. and Benke where a covered peril and uncovered peril combined to cause a loss. The court did not address this issue further because no overlap situation existed in that case. Similarly in Am. Family Mut. Ins. Co. v. Schmitz, the Wisconsin Court of Appeals declined to decide the effect of an anti-concurrent cause provision on the Rule when the provision preceded all exclusions in an insurance policy and read, “[s]uch loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”However, it would appear the identical policy language in the R & S Meats and Schmitz cases is sufficient to defeat coverage in an overlap situation.
The Independent Concurrent Cause rule states that when a covered risk and an excluded risk work together to cause a loss, the insurer is obligated to pay for that loss. Bankert identified boundaries to the Rule that the covered risk must exist and be actionable independently, or without the occurrence of the excluded risk, for the Rule to apply. Essentially, Bankert requires the insurer to consider whether the covered risk was a potential case of the injury. That is, would the insured reasonably expect coverage for the cause of the loss under the policy? The Estate of Jones case confirmed that the proper analysis in applying the Rule was whether the covered risk was or could have existed without the occurrence of the excluded risk. Additionally, an insurer may explicitly bar coverage in an overlap, or independent concurrent cause, situation by including an anti-concurrent cause provision, such as was used in R & S Meats.
Joshua Greatsinger graduated from the University of Wisconsin Law School in May 2016 and immediately joined Nash, Spindler, Grimstad & McCracken LLP in Manitowoc, Wisconsin, as an associate. He represents and advises clients in a variety of practice areas, including insurance defense, personal injury disputes and insurance coverage matters. Josh is a member of the Wisconsin Defense Counsel and the Manitowoc County Bar Association. He is admitted to practice in Wisconsin and before both the Eastern and Western United States District Courts of Wisconsin.
Justin Wallace is a partner and litigator at Nash, Spindler, Grimstad & McCracken, specializing in insurance, business, and employment matters. He enjoys being a lawyer: Trying cases, arguing appeals, and overall case strategy. He tries to work smarter not longer and hates the word “busy”.
1 See Kudella v. Newark Ins. Co., 3 Wis. 2d 599, 601, 89 N.W.2d 219, 220 (1958)
2 71 Wis. 2d 408, 238 N.W.2d 514 (1976).
3 Lawver, 71 Wis. 2d 408.
7 Id. at 422.
8 89 Wis. 2d 555, 278 N.W.2d 857 (1979).
9 Kraemer Bros., 89 Wis. 2d at 570.
10 110 Wis. 2d 356, 329 N.W.2d 243 (Ct. App. 1982)
11 Benke, 110 Wis. 2d at 358.
12 Id. at 358-59.
16 Id. at 359-60.
18 Id. at 360-61
19 110 Wis. 2d 469, 329 N.W.2d 150 (1983).
20 Bankert, 110 Wis. 2d at 471.
21 Id. at 472.
23 Id. at 472-73.
25 Id. at 478.
26 Id. at 484.
27 Flejter v. W. Bend Mut. Ins. Co., 2010 WI App 174, ¶ 9, 330 Wis. 2d 721, 732, 793 N.W.2d 913, 918.
28 Smith v. State Farm Fire & Cas. Co., 192 Wis. 2d 322, 332, 531 N.W.2d 376, 380 (Ct. App. 1995).
29 See Smith, 192 Wis. 2d 322 (covered risk of snowmobiling while intoxicated and without a helmet did not provide the basis for an independent cause of action from the excluded risk of snowmobiling at an uninsured location); Malone v. Gaengel, 221 Wis. 2d 92, 583 N.W.2d 882 (Ct. App. 1998) (negligent entrustment of an all-terrain vehicle to a minor and failing to require his passenger wear a helmet did not provide the basis for an independent cause of action from the excluded risk of negligent operation of the all-terrain vehicle); Am. Family Mut. Ins. Co. v. Schmitz, 2010 WI App 157, 330 Wis. 2d 263, 793 N.W.2d 111 (covered risk of defective methods of construction not actionable without excluded risk of surface water washing out the earth underneath the home); Siebert v. Wisconsin Am. Mut. Ins. Co., 2011 WI 35, 333 Wis. 2d 546, 797 N.W.2d 484 (covered risk of negligent entrustment was not an independent concurrent cause of injury from the excluded risk of negligent operation of a vehicle).
30 2009 WI App 88, 320 Wis. 2d 470, 768 N.W.2d 245.
31 2009 WI App 88, ¶ 2.
36 Id., ¶ 4,
37 Id., ¶ 13.
38 Id., ¶¶ 14-16.
39 See Winter v. Seneca, 2012 WI App 1, 338 Wis. 2d 212, 808 N.W.2d 175.
40 190 Wis. 2d 196, 210-11, 526 N.W.2d 791, 797 (Ct. App. 1994) (emphasis added).
41 R & S Meats, 190 Wis. 2d at 210-11.
43 Id. at 211.
44 2010 WI App 157, ¶ 24, 330 Wis. 2d 263, 277, 793 N.W.2d 111, 118.