Ensuing or resulting loss clauses in homeowners’ and commercial property policies are included in the prefatory language to some, but not all, exclusions. Typically a property policy has a first set of exclusions (section “1” or “A”) that include an anti-concurrent causation clause and do not have an ensuing loss clause. A second set of exclusions (which may be labeled section “2” or “B”) typically do not include an anti-concurrent causation clause and have an ensuing or resulting loss clause. In a typical ISO policy form, for example, this second set of exclusions might include the “Weather conditions” exclusion, the “Acts or decisions” exclusion and the “Faulty, inadequate or defective” exclusion.

Ensuing loss clauses have a variety of different forms. One form of this clause is:

We do not insure for loss to property described in [applicable coverages] caused by any of the
following. However, any ensuing loss to property described in [applicable coverages] not
excluded or excepted in this policy is covered.

Another form of this type of clause is as follows:

But if a loss not otherwise excluded results, we’ll pay for that resulting loss.

Other policy wording provides as follows:

In the event an excluded cause of loss results in a Covered Cause of Loss, the Company
will be liable only for such resulting loss or damage.

A classic example of an ensuing loss is the San Francisco earthquake of 1906, which led to widespread fires. Loss caused an earthquake was generally excluded then (and now) under property insurance policies, but insurers intended to provide coverage for damage caused by fire, which was a separate and independent cause of loss.

The U.S. Court of Appeals for the Sixth Circuit has explained that an ensuing loss clause serves two purposes: (1) the clause reaffirms “that what is not excluded is covered”; and (2) the clause “establishes that chronologically later-in-time damages ‘caused’ by ‘a peril not otherwise excluded’ remain covered.” TMW Enters., Inc. v. Federal Ins. Co., 619 F.3d 574, 577-79 (6th Cir. 2010). Courts have repeatedly recognized that, for the ensuing loss clause to apply, there must be a “subsequent ensuing cause of loss separate and independent from the initial excluded cause of loss . . . .” Weeks v. Co-Operative Ins. Cos., 817 A.2d 292, 296 (N.H. 2003) (emphasis added). This is so that the ensuing loss clause, as an exception to an exclusion, does not eviscerate the exclusion by allowing coverage for a loss that was caused by the excluded cause of loss. A leading case on this point is Acme Galvanizing v. Fireman’s Fund Ins. Co., 270 Cal. Rptr. 405 (Cal. Ct. App. 1990).

It is also important to note that an ensuing or resulting loss clause does not provide coverage where the claimed “second loss” is separately excluded by another exclusion in the policy. For example, if faulty design or construction of a dam or levee leads to a flood, even assuming that the flood was a separate and independent cause of loss that would be an ensuing loss, the damage caused by the flood would not be covered if it is separately excluded by a flood exclusion.