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by Isabella Stankowski-Booker and Jackson A. Griner 

While Georgia’s coastline is vulnerable to exposure from tropical storms, most hurricanes miss the Peach State. Typically, these treacherous storms either dodge Georgia entirely, or fizzle out before they impact the State.

Hurricane Helene, however, was different. After barreling through the panhandle of Florida as a category 4 storm, with wind gusts reaching 140 miles per hour, Hurricane Helene slammed into Georgia and South Carolina, before moving north to Tennessee and North Carolina. In its wake, Hurricane Helene left behind a trail of destruction and loss of life, with billions of dollars in property damage and hundreds of fatalities throughout the Southeastern United States.

Helene impacted all 159 counties in Georgia causing widespread flooding and wind damage. Structures collapsed and trees toppled over, knocking down power lines and leaving millions without power for days. Heavy downpours caused rivers and creeks to rapidly swell and spill floodwaters. Atlanta, where Zelle’s office is located, and the metro Atlanta area saw widespread dangerous flooding.

With the first claims coming in, one of the central questions that has been emerging is what peril caused the claimed damage. Below, we provide a high-level overview of Georgia law on causation in the first-party property context.

I. The Policy Language Controls

First and foremost, insurers will need to determine what perils are actually at play and what coverage the underlying policy affords for such perils. As a rule of thumb, the wording of the policy at issue, including its causation language, typically controls. If the policy language in an insurance contract is unambiguous, Georgia courts will enforce the policy as written. Cincinnati Ins. Co. v. Magnolia Ests., Inc., 286 Ga. App. 183, 185, 648 S.E.2d 498, 500 (2007). This also holds true for policy exclusions. As one court recently explained: “If a policy exclusion is unambiguous, however, it must be given effect even if beneficial to the insurer and detrimental to the insured. We will not strain to extend coverage where none was contracted or intended. Whether ambiguity exists in a contract is a question of law for a trial court.” Frey v. Nationwide Mut. Ins. Co., 371 Ga. App. 590, 592, 901 S.E.2d 730, 733 (2024)(quoting Sharma v. City of Alpharetta, 361 Ga. App. 692, 695, 865 S.E.2d 287 (2021)); Aldridge v. Travelers Home & Marine Ins. Co., 2018 WL 2056567 (N.D. Ga. Jan. 25, 2018). In contrast, ambiguous terms are typically construed against the carrier. Certain Underwriters at Lloyd's of London v. Rucker Const., Inc., 285 Ga. App. 844, 848, 648 S.E.2d 170, 174 (2007).

With these rules of policy interpretation in mind, there are some initial questions to consider before embarking on the causation analysis. For example, if flood is covered, how is it defined? While some commercial property policies include narrow flood definitions, other policies have flood definitions that include the rapid accumulation of surface waters as well as the rising, overflowing or breaking of boundaries of lakes, reservoirs, rivers, streams or other bodies of water. Other policies also cover mudslide and mudflow under their definition of “flood.” Yet other policies cover wind driven rain, storm surge, and flood that occurs in conjunction with a tropical storm under the “Named Windstorm” peril. Moreover, what causation language does the policy use for these perils? Finding answers to these questions is the first step in any causation analysis.

II. Georgia Applies The Efficient Proximate Cause Theory Where A Covered Cause And An Uncovered Cause Combine To Cause Loss Or Damage

Once the perils at play are identified, we can focus on the causation analysis. Where there is a single cause of loss, Georgia courts apply a basic proximate cause theory to determine whether there is coverage. See Bowers v. Farmers Ins. Exch., 99 Wash. App. 41, 47 (2000)(“When an insured can identify an insured peril as the proximate cause, then there is coverage even if subsequent events are specifically excluded from coverage.”); Bennett Int'l Grp., LLC v. Allied World Specialty Ins. Co., 2022 WL 94525 (N.D. Ga. Jan. 10, 2022).

Where a loss results from multiple potential causes, Georgia will apply the efficient proximate cause theory. Burgess v. Allstate Ins. Co., 334 F. Supp. 2d 1351, 1361 (N.D. Ga. 2003). This theory applies specifically “when two or more identifiable causes contribute to a single property loss–at least one of them covered under the policy[,] and at least one of them excluded under the policy.” Id at 1360 (citations omitted). The efficient proximate cause is “the one that necessarily sets the other causes in operation, [while] … causes that are merely incidental ... are not the proximate causes and the responsible ones, though they may be nearer in time to the result.” Dunbar v. Davis, 32 Ga. App. 192, 122 S.E. 895 (1924).

Assume, for example, that a policy covers winds but does not cover flood. Where the claimed loss results from both perils, a court applying Georgia law would likely apply the efficient proximate cause theory to determine coverage. In this regard, the court would assess whether “a risk specifically insured against sets other causes in motion in an unbroken sequence between the insured risk and the ultimate loss. In such situations, the insured risk is regarded as the proximate cause of the entire loss, even if the last step in the chain of causation was an excepted risk.” Burgess, 334 F. Supp. 2d at 1360 (quoting TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co., 114 F.3d 731, 733 (8th Cir. 1997).

III. Georgia Likely Enforces Anti-Concurrent Causation And Anti-Sequential Causation Clauses

While the efficient proximate cause theory sounds straightforward in theory, in practice it has led to disputes regarding which cause, or causes, may have contributed to a loss and which can be deemed the efficient proximate cause. Accordingly, in an effort to reduce these disputes and provide contract certainty, parties often negotiate anti-concurrent causation language into their policies. Under those provisions, the loss will be excluded if any cause of loss is excluded, regardless of whether a covered cause of loss qualifies as the efficient proximate cause. See In re Covington Lodging Inc., 635 B.R. 675, 697 (Bankr. N.D. Ga. 2021)

Georgia seemingly enforces anti-concurrent causation clauses. See In re Covington Lodging Inc., 635 B.R. 675, 697 (Bankr. N.D. Ga. 2021)(“Parties . . . can contract around these default rules with an anti-concurrent cause (“ACC”) provision. When damage arises from multiple causes, an ACC provision circumvents the doctrine of efficient proximate cause and bars coverage [, even] where the loss is caused by a combination of covered and excluded perils.”); Nationwide Prop. & Cas. Ins. Co. v. Hampton Ct., L.P, 2024 WL 2193348 (N.D. Ga. May 15, 2024).

Georgia also allows similar anti-sequential clauses aimed at barring recovery where two causes operate in succession to cause a loss. Id; citing Downs Ford, Inc. v. Zurich Am. Ins. Co., 2021 WL 1138141, at *6 (D.N.J. Mar. 25, 2021)(“An anti-concurrent causation or anti-sequential causation clause will exclude coverage when a prescribed excluded peril, alongside a covered peril, either simultaneously or sequentially, causes damage to the insured.”).

In sum, we anticipate that the legal issues arising from Hurricane Helene will build on the existing Georgia case law on causation. Having experienced Hurricane Helene firsthand, the Zelle Atlanta office is now actively monitoring the legal landscape as the claims adjustment process continues. In addition to questions regarding causation, we are analyzing other legal issues that may materialize in the immediate aftermath of the storm, including the application of different deductibles and sublimits related to different perils, notice requirements, and assignments of benefits. We are available to assist our clients as they navigate the legal landscape in Georgia. 

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.