When two elements combine to cause damage, one being covered and the other not covered, issues arise regarding whether the loss is covered, and who bears the burden of proof to allocate causation between the covered cause and the excluded cause.
Courts have held that the insurance company will only be liable for that portion of the damage that was caused by a covered event. In the 1999, San Antonio Court of Appeals opinion, Wallis v. United Services Automobile Association, the court noted that a “straight Balandran analysis” would not apply in a situation involving multiple causes. Thus, as a practical matter, the practitioner must evaluate the claim underlying any lawsuit to determine if it involves allegations of damage allegedly attributable to multiple causes or simply one peril deemed to have caused the entire loss.
When covered and excluded perils combine to cause an injury, the Texas Supreme Court has held that the insured must present some evidence affording the jury a reasonable basis on which to allocate the damage. This is seen in the 1993 opinion, Lyons v. Millers Casualty Insurance opinion and in the 1965 opinion, Paulson v. Fire Insurance Exchange opinion.
Generally, courts have held that if a loss occurs as a result of two concurring perils, one insured and one not, then the loss is covered only to the extent that it can be traced to the covered peril. This happened in the 1989 opinion from the Corpus Christi Court of Appeals, National Fire Insurance Co. v. Valero Energy Corp. Expert testimony allocating damage between covered and excluded causes may satisfy this burden of proof, is stated in the 2004, 5th Circuit opinion, Fiess v. State Farm Lloyds.
As was stated in the 1993, Texas Supreme Court opinion, Lyons v. Millers Casualty Insurance Company of Texas, expert allocation of damages between covered and excluded risk is not necessarily required; circumstantial evidence may suffice.
In Lyons, the court held that the insured, Lyons, had the burden of proof on the concurrent causation issue. Lyons’ expert testified to the “likely” presence of preexisting damage and further stated that to distinguish between storm-related damage (a covered peril) and settlement (a non-covered peril) would be very hard. The carrier argued that based on this testimony, Lyons had not met her burden of proof on the allocation issue. But the court found that the testimony of the plaintiff and certain neighbors that there was no damage before the storm, but that there was damage after the storm, was some evidence of the extent of damage attributable solely to the storm.