Lessons of the San Francisco Earthquake of 1906: Understanding Ensuing Loss in Property Insurance

At 5:12 a.m. on April 18, 1906, dust and a deafening rumble filled the air of northern California. Buildings swayed, walls fell, and the world changed in an instant. By sunrise a few minutes later, hundreds had perished in their homes and tens of thousands more were homeless. A devastating earthquake had struck San Francisco. And the worst was yet to come.

Following the earthquake, gas-fed fires broke out across San Francisco. Fires caused by the fire department's ill-fated use of dynamite and campfires set by evacuees quickly burned out of control. Hearing that insurance would cover fire damage but not earthquake damage, desperate property owners set fire to their homes or businesses. With city water mains twisted and broken, there was little to stop the fires. The collective effect of so many fires was an inferno stretching across downtown San Francisco. Those who could find a way out of the city did so. The many who remained fled the downtown. Little food and shelter was available the first day and, inevitably, looting began. Grocery stores, saloons, and retail shops were favorite targets. On orders of the mayor, police and military patrols shot looters on sight, sometimes accidentally killing homeowners and shopkeepers retrieving their own belongings. San Francisco was a city on fire, a city of refugees, a city in chaos.[1]

Three days and three nights of flames consumed more than 28,000 buildings on 514 city blocks. When it was all over, more than 3,000 people had died and 250,000 had lost their homes.  As the fires burned out, order was restored, and the army began to feed and shelter the displaced persons who remained in the city. Slowly, a sense of law and order returned and then the hard work of clearing rubble began. Within weeks, San Francisco was a city eager to rebuild-and in desperate need of the funds to do it. In an era when government and charitable funds available for reconstruction were relatively minimal, it was the property insurance companies that stepped in. The property insurers saved San Francisco by covering more than 90 percent of the damage as fire damage at a time when earthquake damage was not insured.[2]                            

Today, students of property insurance are taught that when an excluded cause of loss, such as an earthquake or earth movement, brings about a covered cause of loss, such as fire, a property insurance policy may cover the ensuing loss. The 1906 San Francisco earthquake has become the classic ensuing loss paradigm because fire (a covered peril) followed and arose from earthquake (not a covered peril). Property insurance covered the ensuing fire damage, but not the earthquake damage, because fire was a covered cause of loss and earthquake was not.[3]

A century later, modern all-risk property insurance policies embody the ensuing loss concept by including it as an exception to various exclusions. One example of ensuing loss language follows:

We will not pay for loss or damage caused by or resulting from any of the following [excluded causes of loss]. But if an excluded cause of loss listed [below] results in a Covered Cause of Loss, we will pay for the loss or damage caused by that Covered Cause of Loss.

The example is from a commonly used Insurance Services Office (ISO) commercial property insurance form.[4] Other policies may use different language, referring to ensuing damage "from a peril not otherwise excluded" by the policy or even employing the shorthand of "resulting damage," to convey the intent to create an exception preserving coverage for ensuing losses from a covered peril.

Coverage disputes over whether a loss is excluded by the terms of an exclusion or covered as an ensuing loss are common. Sometimes, the scope and purpose of the ensuing loss exception are distorted or simply misunderstood. One goal of this article is to illuminate these disputes by providing context as to the historical purpose of the ensuing loss exception. We begin with a case that, arising eight decades after the San Francisco earthquake, provides a modern example of the ensuing loss exception serving its intended purpose of preserving coverage for an insured loss.

In St. Paul Fire & Marine Insurance Co. v. Protection Mutual Insurance Co.,[5] St. Paul insured a factory under a policy excluding electrical accidents "unless loss or damage from a peril insured herein ensues and then only for ensuing loss or damage." An electrical accident occurred causing a fire and associated chemical contamination. St. Paul sought unsuccessfully to avoid liability by arguing that the excluded electrical accident was the legal cause of the factory fire and that fire, an insured peril under the St. Paul policy, should not be held to be an ensuing loss.

The St. Paul court held the fire to be an insured ensuing loss. In the tradition of the San Francisco earthquake paradigm, the court applied the ensuing loss exception to the electrical injury exclusion to preserve coverage for the "separately covered" peril of fire.[6] The case demonstrates the ensuing loss exception working as intended to preserve coverage for damage caused by an insured peril. The St. Paul case also answers the ancillary question of whether coverage for the ensuing loss enables an insured to somehow recover the costs associated with the excluded event. The court's answer was predictably in the negative. The property insurer was held responsible for $2,050,000 in fire damage but not the $50,000 in damage from the electrical accident.[7]

The St. Paul case is notable for the clarity of the court's understanding of the purpose of the ensuing loss exception. Not all courts have demonstrated such a clear understanding.

Misunderstanding Ensuing Loss

Courts in a few jurisdictions have been so perplexed by ensuing loss disputes as to hold standard language ambiguous or hold that the ensuing loss exception simply nullifies the exclusion at issue.[8] In Lake Charles Harbor & Terminal District v. Imperial Casualty & Indemnity Co.,[9] for example, the Fifth Circuit Court of Appeals found damage to shiploading equipment directly caused by an excluded cause to be covered as its own ensuing loss under Louisiana law, famously referring to the ensuing loss clause as "self-contradictory gibberish."[10] Decisions of this sort finding coverage for what appear to be clearly excluded losses may be explained as result-oriented, but the courts' opinions suggest a different explanation: a lack of understanding of the purpose of the ensuing loss exception.

In Husband v. Lafayette Insurance Co., a Louisiana state court found the ensuing loss exception "patently ambiguous."[11] Lacking any understanding of the historical purpose of the ensuing loss exception, the court complained that the policy "does not contain a definition of the term ‘ensuing loss.'"[12] In Rosenberg v. First State Insurance Co., the court erroneously assumed without analysis that the ensuing loss exception must be intended to nullify the faulty workmanship exclusion and so "the conclusion is inescapable that faulty workmanship is a covered peril."[13] The Sixth Circuit in Farmers Chemical Ass'n v. Maryland Casualty Co. similarly concluded without analysis that the exception "is at best ambiguous."[14] In Goldner v. Otsego Mutual Fire Insurance Co., the court did not look to the historical purpose of the ensuing loss exception, but instead used a dictionary definition to conclude that the ensuing loss exception must mean that there is coverage for all damage that is later in time than the excluded cause of loss.[15] Bereft of any understanding of the purpose of the ensuing loss exception, the Lake Charles court similarly moved from its characterization of the exception as "self-contradictory gibberish" to a finding that "[w]hatever ensuing peril may mean," it did not preclude finding coverage for damage to a machine directly caused by an excluded mechanical breakdown.[16]

As the quoted language suggests, these courts lacked the kind of background knowledge of the purpose of the ensuing loss exception that can be very helpful in interpreting it. For example, if familiar with the San Francisco earthquake paradigm, these courts would have known that the ensuing loss exception does not nullify or render ambiguous an exclusion, but rather simply preserves coverage for losses caused by a covered peril that happen to ensue from the excluded event. The result in these unfortunate cases-mistakenly finding in the ensuing loss exception to an exclusion a grant back of coverage for the excluded event or damage itself-has not found broad support in other cases. In fact, as the jurisprudence on ensuing loss has grown over the last ten years, the courts have demonstrated an improving understanding of the scope and purpose of the ensuing loss exception.[17] 

A Better Understanding: Recent Defect Cases

One of the simplest-and best-articulations of the purpose of the ensuing loss exception comes from a 2003 case in which the New Hampshire Supreme Court rejected an argument that the separation of a defective veneer wall constituted an ensuing loss. The court held in Weeks v. Co-operative Insurance Companies[18] that the ensuing loss exception to the faulty workmanship exclusion only applies where there has been a "subsequent ensuing cause of loss separate and independent from the initial excluded cause of loss . . ." and that the failure of the veneer was part of the excluded faulty workmanship loss. As the court observed, "the uncovered event itself, however, is never covered."[19]

In a 2004 California case, Merz v. Markel Insurance Co.,[20] the court explained that for the ensuing loss exception to apply the peril that causes the ensuing loss or injury must be "separate and independent" from the original excluded peril. The court held that where faulty workmanship in the grading of a slope damaged a retaining wall, no ensuing loss had occurred and the damage was excluded under the faulty workmanship exclusion. In an even more recent California federal court case, Loughney v. Allstate Insurance Co.,[21] the court addressed the ensuing loss issue in the context of a landslide and found that the landslide damage to a building was excluded under the earth movement exclusion.  The court in Loughney gave an example of ensuing loss that is consistent both with the San Francisco earthquake and fire paradigm and the explanation of ensuing loss in Weeks and Merz: "As observed by Allstate, an ‘ensuing loss' provision ‘creates coverage only if an excluded cause of loss (here, landslide) resulted in a secondary peril (such as fire) that itself is covered by the policy, and the secondary peril caused a loss.'"[22]

More recently, in Bedford, LLC v. Safeco Insurance Co.,[23] the Washington Court of Appeals held that where rot and decay were excluded from coverage, they could not be covered as an ensuing loss. Explaining that an ensuing loss provision only "preserves coverage where a covered loss is caused by an excluded peril," the court concluded that the "ensuing loss provision thus did not operate because there was no covered loss."[24]

These cases emphasize the requirement that an ensuing loss involve new and different damage from a new, covered cause of loss, such as the damage from fire that followed the San Francisco earthquake. Another way to explain the scope of the ensuing loss exception consistent with its history is to say that it at least requires a new loss to property that is of a kind not excluded by the policy.

In Alton Ochsner Medical Foundation v. Allendale Mutual Insurance Co.,[25] the issue was a defective foundation. The insured repaired some initial cracks, but cracking in the foundation worsened, threatening the structural integrity of the building. The insurer cited exclusions for faulty design and cracking in foundations. The insured creatively argued that the more severe cracking constituted an ensuing loss that was covered. In rejecting the ensuing loss argument, the court stated that the ensuing loss exception only applies if "damage of a different kind-a kind that is not excluded-results from the excluded faulty workmanship."[26] The court concluded that the ensuing loss exception did not apply because the impairment of the structure was not a new loss caused by faulty workmanship or cracking. As the court observed, the impairment was simply part of the excluded loss, noting that "they are synonymous" and there had not been a new loss "of a different kind." [27]

In Wal-Mart Stores, Inc. v. Gulf Insurance Co.,[28] the federal court in Oregon used similar reasoning to reject an ensuing loss argument where the claim was for $1.5 million in repairs to a defectively designed concrete floor in the insured's distribution center. The court explained the purpose and intent of the ensuing loss exception by giving the example of a leaky roof: the resulting "dry rot or mold . . . is not covered. If, however, the water . . . causes an electrical short [and] fire, then the fire damage is a covered ‘ensuing loss.'"[29] Note that the court's example includes a loss that ensues from the original excluded loss, but involves a new, covered cause (i.e., fire) and resulting damage that is new and different from the original excluded damage. The example is consistent both with the San Francisco earthquake and fire paradigm and the explanation of ensuing loss in Weeks, Merz, Loughney, Bedford, and Alton Ochsner.

In a recent Indiana case, Hartford Casualty Insurance Co. v. Evansville Vanderburgh Public Library,[30] the court of appeals rejected an insured's ensuing loss argument and held that the damage to a library building caused by faulty excavation work nearby was excluded as a loss caused by faulty workmanship. The court concluded that there had been no ensuing loss where the insured's claim was for "a specifically excluded loss" that did not give rise to a separate ensuing loss caused by a "covered cause of loss."[31] 

In another oft-cited building defect case involving ensuing loss issues, Montefiore Medical Center v. American Protection Insurance Co.[32] Judge Laura Taylor Swain  of the Southern District of New York found that no ensuing loss had occurred where the insured's only claim was for the collapse of a defectively designed façade. The court emphasized the need for a new covered loss to occur before the ensuing loss exception becomes relevant. The court expressly rejected the idea that an ensuing loss exception nullifies or limits the faulty workmanship exclusion because "to accept Plaintiff's characterization as ‘ensuing loss' the collapse of a defectively designed façade would be to allow ‘the exclusion clause  . . . [to be] swallowed by the exception' . . . An ensuing loss provision does not cover loss caused by the excluded peril, but rather caused to other property wholly separate from the defective property itself."[33] Including the collapse of the defective façade within the excluded loss caused by defective design, the judge found that there had not been a separate, new loss and the "ensuing loss provision is thus inapplicable." [34]

In Alwart v. State Farm Fire & Casualty Co.,[35] the insureds argued that otherwise excluded water damage should be covered as ensuing loss from excluded faulty workmanship. The court accepted State Farm's argument that the historical purpose of the ensuing loss exception "is not to create new coverage but to further define what is covered," and rejected the argument that "the ensuing loss clause contained in the defective construction and materials exclusion [is] a grant of coverage." [36] In Capelouto v. Valley Forge Insurance Co.,[37] the Washington Court of Appeals relied on similar reasoning to find that sewage damage caused by the defective design of a pumping station did not constitute an ensuing loss. Noting that the loss fit squarely within the defective design exclusion, the court observed that "[a]n insured may not avoid a contractual exclusion merely by affixing an additional label or separate characterization to the act or event causing the loss."[38] The court concluded that "[e]nsuing loss provisions are exceptions to policy exclusions and thus should not be interpreted to create coverage."[39]

These cases are true to the historical purpose of the ensuing loss exception. The purpose of the ensuing loss exception has been and remains to preserve coverage for insured losses, such as the fires after the San Francisco earthquake, and not to create a "grant-back" through which coverage may be had for the original excluded loss, whether it be an earthquake, a design defect, or any other excluded cause of loss.[40]

The federal court decision in Vermont Electric Power Co. v. Hartford Steam Boiler Inspection and Insurance Co. (VELCO)[41] is also instructive. The relevant insurance policy excluded design defect with an exception for ensuing loss. In holding that overheating resulting from design defects in the insured's transformers was not an ensuing loss, the court explained that an ensuing loss must be a new, covered loss and not just an extension of the excluded loss or condition. The court explained that "[w]here a property insurance policy contains an exclusion with an exception for ensuing loss, courts have sought to assure that the exception does not supersede the exclusion by disallowing coverage for ensuing loss directly related to the original excluded risk."[42]

The VELCO case highlights a conceptual bright line test that many courts, including Judge Swain in Montefiore, have found useful: damage to defective property caused by an excluded defect can never be an ensuing loss. Following this rule avoids the situation in which "the exception swallows the exclusion."[43]

A few insureds have advanced novel or creative theories of ensuing loss in attempts to circumvent the faulty design and workmanship exclusions in property insurance policies. These efforts have met with little success in the last ten years. In Laquila Construction, Inc. v. Travelers Indemnity Co. of Illinois,[44] the insured sought coverage for the costs required to remove and replace a defective concrete slab. The insured argued that "the installation of concrete that proved to be defective . . . physically damaged the insured property" and the damage from the defect should be considered an ensuing loss separate from the defect. The court predictably disagreed and concluded that "the plaintiff's claim falls squarely into the exclusion clause simply as a cost incurred to make good the defective concrete." As in VELCO, the court reasoned that the ensuing loss had to be "wholly separate" from the faulty material or workmanship itself, that the insured's "claim for coverage here is no more than an attempt to recover for the excluded costs of making good its faulty or defective workmanship," and that "the exception to an exclusion should not be read so broadly that the rule-the exclusion clause-is swallowed by the exception-here, the exception for ensuing loss."[45]

In a 2003 decision, Swire Pacific Holdings, Inc. v. Zurich Insurance Co.,[46] an insured sought recovery for repairs to remedy design defects in a new condo complex. The Florida Supreme Court held that the ensuing loss exception could not apply where "[n]o loss separate from or as a result of, the design defect occurred. . . . [The insured] is not entitled to recover the expenses associated with repairing the design defect."[47] The quotation illustrates the court's understanding that the ensuing loss exception is not intended to serve as a grant-back of coverage for an excluded cause or event.

Mold and Asbestos Cases

In its influential 2006 decision in Fiess v. State Farm Lloyds,[48] the Texas Supreme Court held that where an insurance policy excludes mold, mold cannot be covered as an ensuing loss to water damage. The court discredited the argument that the ensuing loss clause should be viewed as a way to circumvent the mold exclusion, pointing out that "the [insured's] argument that an ensuing-loss clause can make an excluded loss reappear as a covered loss has been rejected by courts in Alabama, Arizona, California, Florida, Illinois, Massachusetts, Minnesota, New York, North Carolina, New Hampshire, Ohio, Pennsylvania, Vermont, Washington and Wisconsin."[49] After Fiess, there can be little doubt that the trend in ensuing loss cases is an interpretation faithful to the historical purpose of the ensuing loss exception and hostile to attempts to use the exception to create coverage for an otherwise excluded loss.

Another court reached the same result on the mold issue just one month earlier. In Bloom v. Western National Insurance Co.,[50] the Minnesota Court of Appeals concluded that "damage caused by mold and rot is not covered as an ensuing loss . . . mold and rot are not separate and distinct perils." The same result was reached on the mold issue by the Washington Court of Appeals in Wright v. Safeco Insurance Co.[51] and the federal court in Oregon in Prudential Property & Casualty Insurance Co. v. Lillard-Roberts.[52]

More recently, in Feinbloom v. American International Insurance Co.,[53] the Michigan Court of Appeals also rejected a claim for coverage of mold as an ensuing loss. The insurance policy at issue in Feinbloom excluded loss caused by mold. The court of appeals found that the insured's attempt to employ the ensuing loss exception to negate the exclusion "was merely an exercise in semantics [that] does not preclude the grant of summary disposition" for the insurer.[54] To illustrate the narrow but important purpose of the ensuing loss exception, the court gave the example of a rusty fire alarm control that malfunctions and sets off a building's fire sprinklers: "the water damage would be covered as a consequence of the excluded rust damage (absent, of course, the operation of another exclusion), but the rusty fire alarm would not be covered."[55] Because mold was excluded and there was no new covered peril causing distinct damage, there was no ensuing loss.

In an earlier decision, Cooper v. American Family Mutual Insurance Co.,[56] Judge James Teilborg  of the District of Arizona held that where the insurance policy excludes mold, the court cannot find mold to be an ensuing loss covered by the policy. Rejecting the argument that "resulting loss" wording broadens an ensuing loss clause, the judge observed that "[b]y its very working, the ‘resulting loss' clause only reaffirms coverage for resulting loss . . . ‘not excluded or excepted in the policy.' . . . the resulting loss provision does not reinsert coverage for excluded losses." [57]  The court found no coverage because "there is no separate or independent peril. . . . The ‘resulting loss' clause does not resurrect the excluded peril to provide coverage."[58]

In essence, the courts in all six of these mold cases held that mold could not be an ensuing loss because mold was excluded damage and no separate or independent peril creating new damage had ensued. As Judge Teilborg stated in Cooper, the ensuing loss exception cannot resurrect coverage for an excluded peril.

The decisions in Fiess, Bloom, Wright, Lillard-Roberts, Feinbloom, and Cooper are consistent with the reasoning of the Illinois Court of Appeals in an asbestos matter where ensuing loss was argued. In Board of Education of Maine Township High School District 207 v. International Insurance Co.,[59] the insurance policy excluded loss "caused, aggravated by, or added to by asbestos-related products." The Illinois court rejected the insured's attempts to find coverage for its asbestos abatement expenses in the ensuing loss clause of the exclusion because the ensuing loss "clause does not operate . . . to give back coverage for loss or damage caused by, aggravated by, or added to by asbestos-related products."[60]

Business Interruption and Extra Expense

From time to time, the argument has been made that the ensuing loss exception is ambiguous and therefore should be held to cover extra expense and lost profits from the business interruption occasioned by the excluded cause or event. The best known case on this issue is the Third Circuit's decision involving an insurance claim for Y2K computer remediation expenses. In GTE Corp. v. Allendale Mutual Insurance Co.,[61] the Third Circuit rejected the argument that business interruption from an excluded cause constitutes an ensuing loss. As the court explained, "business interruption loss ensuing from a design defect or inherent vice [excluded causes] would not be a covered loss . . . . Any other reading of the exclusionary provisions would render the provision a virtual nullity."[62] The GTE reasoning on this issue has been widely accepted.[63]

Conclusion

As this article's brief review of noteworthy recent cases illustrates, the courts by and large are doing a good job of resisting entreaties to find coverage in the ensuing loss exception for losses that the property insurance policy plainly excludes. The better decisions of the last decade largely fall in line with the historical purpose of the ensuing loss exception, as reflected in the paradigmatic story of the San Francisco earthquake of 1906. The ensuing loss exception exists solely to preserve coverage for property losses caused by a covered cause of loss following an excluded cause or event. The purpose of the ensuing loss exception is limited but important, and in the fulfillment of this purpose San Francisco was rebuilt. This is the great insurance lesson of the San Francisco earthquake of 1906.


                [1] The author's recitation of the facts and circumstances of the earthquake and fires in San Francisco in April 1906 is drawn from several resources. See generally Eric Niderost, The Great 1906 San Francisco Earthquake and Fire, AMERICAN HISTORY, April 2006, reprinted at www.historynet.com/the-great-1906-san-francisco-earthquake-and-fire.htm; Earthquake and Fire Digital Collection, BANCROFT LIBRARY OF THE UNIVERSITY OF CALIFORNIA AT BERKELEY, http://bancroft.berkeley.edu.collections/earthquakeandfire/; The Great 1906 Earthquake and Fire, THE VIRTUAL MUSEUM OF THE CITY OF SAN FRANCISCO, www.sfmuseum.org/1906/06.html; Report of Captain Leonard D. Wildman of the U.S. Army Signal Corps, The Great 1906 Earthquake and Fire: Arson Fires,  THE VIRTUAL MUSEUM OF THE CITY OF SAN FRANCISCO, www.sfmuseum.org/1906.2/arson.html; A City Rebuilt A Promise Intact: Lloyd's Role, HISTORY OF THE LLOYD'S MARKET, www.lloyds.com/About_Us/History/A_city_rebuilt_a_promise_intact/What_happened/The_quake_and_fire.htm; The 1906 Earthquake and Fire: Law Enforcement, ARCHIVES OF THE NATIONAL PARK SERVICE: HISTORY OF THE PRESIDIO OF SAN FRANCISCO, www.nps.gov/archive/prsf/history/1906eq/lawenfor.htm; The Great 1906 San Francisco Earthquake, U.S. GEOLOGICAL SURVEY EARTHQUAKE HAZARDS PROGRAM, http://earthquake.usgs.gov/regional/nca/ 1906/18april; and The San Francisco Earthquake of 1906: An Insurance Perspective, INSURANCE INFORMATION INSTITUTE, www.iii.org/media/research/sfearthquake100.
                [2] Eric Niderost, The Great 1906 San Francisco Earthquake and Fire, AMERICAN HISTORY, April 2006, reprinted at www.historynet.com/the-great-1906-san-francisco-earthquake-and-fire.htm; Earthquake and Fire Digital Collection, BANCROFT LIBRARY OF THE UNIVERSITY OF CALIFORNIA AT BERKELEY, http://bancroft.berkeley.edu/collections/earthquakeandfire/. Mindful of San Francisco's desperate need for insurance funds, San Francisco's civic leaders generally referred to the catastrophe as the San Francisco Fire (or the San Francisco Conflagration) and sought to avoid mention of the uninsured earthquake in public pronouncements. See Earthquake and Fire Digital Collection, BANCROFT LIBRARY OF THE UNIVERSITY OF CALIFORNIA AT BERKELEY, http://bancroft.berkeley.edu/collections/earthquakeandfire/exhibit/room05_item02.html.
[3] The San Francisco Earthquake of 1906: An Insurance Perspective, INSURANCE INFORMATION INSTITUTE, www.iii.org/media/research/sfearthquake100. In a move credited with cementing Lloyd's premier reputation in the United States, Lloyd's leading nonmarine underwriter Cuthbert Heath cabled the following terse instruction to his San Francisco agent after the news of the catastrophe reached London: "Pay all of our policyholders in full irrespective of the terms of their policies." A City Rebuilt A Promise Intact: Lloyd's Role, HISTORY OF THE LLOYD'S MARKET, www.lloyds.com/About_Us/History/ A_city_rebuilt_a_ promise_ intact/Lloyds_role/Heath_pays_all_claims.htm.
[4] ISO CP10300402 (2001) (emphasis added).
[5] 664 F. Supp. 328, 332 (N.D.  Ill. 1981).
[6] Id. at 335.
[7] Id.
[8] See, e.g., Husband v. Lafayette Ins. Co., 635 So. 2d 309 (La. App. 1994); Rosenberg v. First State Ins. Co., 280 Cal. Rptr. 388 (Cal. Ct. App. 1991); Farmer's Chem. Ass'n v. Maryland Cas. Co., 421 F.3d 319 (6th Cir. 1970); Goldner v. Otsego Mut. Fire Ins. Co., 336 N.Y.S.2d 717, 39 A.D.2d 440 (N.Y.A.D. 1972).
[9] 857 F.2d 286 (5th Cir. 1988).
[10] The decision of Judge Stanwood R. Duval Jr in In re Katrina Canal Breaches Consolidated Litigation, 466 F. Supp. 2d 729, 761 (E.D. La. 2006) relied on the much-criticized Lake Charles case to find man-made flood to be a covered, ensuing loss. The Fifth Circuit reversed, holding that flood, whether man-made or not, was excluded (In re Katrina Canal Breaches Consolidated Litigation, 495 F.3d 191, 208-221 (5th Cir. 2007)).
[11]  635 So. 2d at 312.
[12] Id.
[13] 280 Cal. Rptr. at 392.
[14] 421 F.3d 319, 321 (6th Cir. 1970).
[15] 336 N.Y.S.2d at 720.
[16] Lake Charles Harbor & Terminal Dist. v. Imperial Cas. & Indem. Co., 857 F.2d 286, 288 (5th Cir. 1998).
[17] Notable exceptions are federal decisions in Tennessee and Kentucky. See Blaine Constr. Corp. v. Ins. Co. of N.A., 171 F.3d 343 (6th Cir. 1999) (following Farmers Chem. Ass'n v. Maryland Cas. Co., 421 F.3d 319 (6th Cir. 1970)) and Eckstein v. Cincinnati Ins. Co., 469 F. Supp. 2d 455, 461-63 (W.D. Ky. 2007) (finding mold covered as an ensuing loss to faulty workmanship despite an exclusion for mold; court relied in part on the homeowner insured's reasonable expectations and the Dictionary.Reference.com definition of "ensue").
[18] 817 A.2d 292, 296 (N.H. 2003) (citing Acme Galvanizing v. Fireman's Fund Ins. Co., 221 Cal. App. 3d 170, 270 Cal. Rptr. 405, 411 (1990) and quoting in part McDonald v. State Farm Fire & Cas. Co., 119 Wash. 2d 724, 837 P.2d 1000, 1005 (1992)).
[19] Id. at 296; see also Bates v. Phoenix Mut. Fire Ins. Co., 943 A.2d 750 (N.H. 2008) ("to apply the ensuing loss provision to provide coverage for what is essentially a flood would subvert the intent of the parties").
[20] No. 02-CC-03739, 2004 WL 392890 (Cal. App. Ct. 2004) (emphasis in original); see also Acme Galvanizing, 221 Cal. App. 3d at 179-80.
[21] 465 F. Supp. 2d 1039 (S.D. Cal. 2006).
[22] Id. at 1042 (emphasis in original).
[23] 140 Wash. App. 1033, No. 55341-1-I, 2007 WL 2757271(Wash.  Ct. App. 2007).
[24] Id. at *2. 
[25] 219 F.3d 501, 505-06 (5th Cir. 2000).
[26] Id. at 506 (emphasis in original).
[27] Id.
[28] No. 3:04-CV-00160, 2005 WL 1231076, at *3-4, aff'd, 2007 U.S. App. LEXIS 23859.
[29] Id. at *3 (quoting Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, No. CV 01-1362-ST, 2002 WL 31495830, at 19 (D. Or. 2002)).
 [30] 860 N.E.2d 636, 647 (Ind. Ct. App. 2007).
[31] Id.
[32] 226 F. Supp. 2d 470, 479 (S.D.N.Y. 2002) (citations omitted); see also Narob Dev't Corp. v. INA, 631 N.Y.S.2d 155 (N.Y.A.D. 1995) (retaining wall collapse excluded as faulty workmanship; ensuing loss argument rejected); Boughan v. Nationwide Prop. & Cas. Co., No. 1-04-57, 2005 WL 126781, at 3-4 (building damage from excluded rot and faulty workmanship not a covered ensuing loss); Schloss v. Cincinnati Ins. Co., 54 F. Supp. 2d 1090, 1096 (M.D. Ala.1999) (building damage from excluded rot not a covered ensuing loss).
[33] Montefiore, 226 F. Supp. 2d at 479.
[34] Id.
[35] 508 S.E.2d 531, 532-33 (N.C. App. 1998).
[36] Id.
[37] 98 Wash. App. 7, 990 P.2d 414 (1999).
[38] Id. at 15.
[39] Id. at 16.
[40] 1 Insuring Real Property § 2.04(19)(d) (S. Cozen ed., 2005) ("[L]osses directly caused by faulty workmanship or design or ensuing from another excluded peril are never covered because the [ensuing loss] clause is not intended to enlarge coverage under the policy . . . [T]he ensuing loss clause is not intended to be a grant of coverage.")(citations omitted).
[41] 72 F. Supp. 2d 441, 445 (D. Vt. 1999).
[42] Id. at 445.
[43] Id. (quoting Aetna Cas. & Sur. Co. v. Yates, 344 F.2d 939, 941 (5th Cir. 1965)).
[44] 66 F. Supp. 2d 543, 545-546 (S.D.N.Y. 1999), aff'd, 216 F.3d 1072 (2nd Cir. 2000).
[45] Id.
[46] 845 So. 2d 161, 167- 68 (Fla. 2003); see also Arnold v. Cincinnati Ins. Co., 276 Wis. 2d 762, 779, 688 N.W.2d 708, 716 (Wis. App. 2004) ("an ensuing loss must result from a cause in addition to the excluded cause").
[47] Id. at 168.
[48] 202 S.W.3d 744, 748 (Tex. 2006)("only reasonable construction of [ensuing loss] clause was that it applied when an excluded risk was followed by an intervening occurrence that in turn caused the ensuing loss") (quoting Lambros v. Standard Fire Ins. Co., 530 S.W.2d 138 (Tex. Civ. App. 1975)).
[49] Id. at 752; see also Carrizales v. State Farm Lloyds, 518 F.3d 343 (5th Cir. 2008) (following Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex. 2006)).
[50] No. A05-2093, 2006 Minn. App. Unpub. LEXIS 651, at **14-15.
[51] 123 Wash.App. 1021, No. 52434-8-I, 2004 WL 2095664, at *5-6 (Wash. Ct. App. 2004) ("Ensuing loss provisions are exceptions to policy exclusions and should not be interpreted to create coverage . . . [Given] a provision that specifically excludes damages caused by mold, the ensuing loss provision . . . does not cover mold damages.").
[52] No. CV 01-1362-ST, 2002 WL 31495830 (D. Or. 2002) ("An ensuing loss requires an unexpected loss due to an intervening or contributing cause other than the mere passage of time.").
[53] No. 276928, 2008 WL 1836563 (Mich. App., Apr. 24, 2008).
[54] Id. at *3; but see Eckstein v. Cincinnati Ins. Co., 469 F. Supp. 2d 444, 455 (W.D. Ky. 2007). The Eckstein decision relied in part on pre-Fiess Texas case law.
[55] Id. at *3.
[56] 184 F. Supp. 2d 960, 964- 65 (D.  Ariz. 2002).
[57] Id. at 964.
[58] Id. at 965. The court implicitly rejected the argument that an ensuing loss exception using the words "resulting loss" is a grant of coverage for damage directly caused by mold.
[59] 292 Ill. App. 3d 14, 684 N.E.2d 978 (1997).
[60] 684 N.E.2d at 984.
[61] 372 F.3d 598, 616 (3d Cir. 2004).
[62] Id.
[63] See, e.g., National Union Fire Ins. Co. v. Texpak Group, N.V., 906 So. 2d 300, 302 (Fla. App. 3d 2005) (ensuing loss claim rejected because "business interruption and extra expense losses are covered only if ‘resulting from' damage . . . caused by a covered peril").

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