Efficient proximate cause is the doctrine that provides that if a loss is caused by two or more events, one a covered cause of loss and the other not a covered cause of loss, despite any policy exclusions, the loss will be covered. For example, earth movement damages a premises and the earth movement is excluded, but the insured claims that a third party was bulldozing land above her property, this is a non-excluded peril. Under efficient proximate cause, the earth damage should be covered because the bulldozing was the efficient proximate cause of loss of the earth movement. The California Insurance Code § 530 states that "An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause."

 In Garvey v. State Farm Fire & Casualty Co., 770 P.2d 704, the insured held that while earth movement was excluded, negligent construction, which was not specifically excluded, contributed to the loss, so that the loss should be covered. The court held that the California appellate courts had been misinterpreting the cases that first used the doctrine of concurrent causation. Returning to traditional property insurance law, the court said that even in the case of an all risks policy, if a loss can be attributed to two causes, one of which is an excluded peril, courts are to find coverage only if the non-excluded peril is the efficient proximate cause of the loss, rather than finding coverage whenever a non-excluded peril is concurrently involved in the loss. (The efficient proximate cause of a loss need not be the one directly prior to the loss. It is the cause that, without which, the loss would probably not have occurred.)

 In a subsequent case, Howell v. State Farm Fire & Casualty Co., (1990) 218 Cal. App. 3d, a fire destroyed some vegetation, the slope failed after heavy rains, and the insured's home and rental property were damaged. The court held that the important question presented by this case is whether a property insurer may contractually exclude coverage when a covered peril is the efficient proximate cause of the loss, but an excluded peril has contributed or was necessary to the loss. The insured presented expert testimony that fire had denuded the above slope, so that when heavy rains occurred, the ground gave way. The court concluded that because the state statutes and civil law make an insurer liable when a covered peril is the efficient proximate cause, regardless of other contributing causes, that coverage should be granted in this case.

 However, in a later case, Julian v. Hartford Underwriters Ins. (2005) 35 Cal. 4th 747, the court granted the insurer summary judgment because a weather conditions clause in the homeowner's policy that excluded coverage for an occurrence caused by the peril of rain inducing a landslide, did not violate this section or the efficient proximate cause doctrine.

 Because the efficient proximate cause doctrine forced carriers to cover losses that had been intended to be excluded, in 1983 ISO developed the anti-concurrent causation language that appears in current homeowners' policies. The statement in the ISO HO 00 03 05 11 Homeowners policy is as follows:

"We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area."

 Earth movement, landslide, mudslide and mudflow are exclusions under this section. With this language, even though fire might be considered the efficient proximate cause of the mudslide, the exclusion of concurrent losses would negate coverage for the ensuing mudslide. This language was developed in response to concurrent causation claims.

 In the notice released today, the California Insurance Department is stating that despite such language, the Insurance Code and various court cases establish that the efficient proximate cause doctrine takes precedence in California. Further, if there were substantial basis that shows that the Thomas fire was the efficient proximate cause of the mudslides, the damage from the mudslides would be covered. According to Cal Civ Code § 1667, policy exclusions that conflict with Insurance Code § 530 and the efficient proximate cause doctrine are unenforceable.

 The department is requiring insurers to perform a diligent investigation before denying claims for mudslide or mudflow to ensure that the fire was not the efficient proximate cause of the loss. A look at the court cases shows that these claims must be carefully reviewed in order to determine if the anti-concurrent language can enforce the exclusion, or if the efficient proximate cause doctrine enforces coverage.