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What is an anti-concurrent causation clause in home insurance and should I worry about it?

An "anti-concurrent causation" clause in a home insurance policy states that if two events happen at roughly the same time (regardless of their order of occurrence) and one is covered and the other is not, the entire claim will be denied. If your home is damaged by a windstorm, for instance, which would be covered in a standard home insurance policy, and then is immediately damaged by a flood and you don't have flood insurance, then the insurer could deny the claim for wind damage under the clause.

Needless to say this caused outrage following Hurricane Katrina when many homeowners, who expected their insurance to cover at least the wind damage their homes suffered, weren't able to collect a dime.

The clause, unfortunately, is found in almost every home insurance policy. Check the exclusions section in a policy to find it.

You're not alone if you think this sounds unfair. Consumer advocates have been up in arms over the clause for years, and the Consumer Federation of America called for state insurance commissioners to ban the clause in 2007. But so far court rulings have upheld the clause and its wording as unambiguous.

Beware of other loopholes in home insurance policies as well, such as different deductibles for different perils, such as:

  • A separate deductible for tornado damage
  • Coverage caps for certain types of damage
  • Coverage limits for valuables, including jewelry, antiques, coins and firearms

Read the fine print of your policy to understand the exclusions and limitations so you know what to expect if you have to file a claim.

For more, see hidden home insurance loopholes can shock you.

Last updated: Feb. 25, 2011