Coverage Analysis
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California courts have distinguished between first and third-party policies, applying the "efficient proximate cause" analysis to first-party policies but a "proximate cause" analysis for liability claims.  Compare Garvey v. State Farm Fire & Casualty Co., 48 Cal. 3d 395, 770 P.2d 704, 257 Cal. Rptr. 292 (1989) with State Farm Mutual Automobile Ins. Co. v. Partridge, 10 Cal. 3d 94, 514 P.2d 123, 109 Cal. Rptr. 811 (1973).  

Thus, first party losses will be covered if the "efficient proximate cause" was not an excluded peril, even if the loss resulted in part from an excluded cause of loss.  Garvey v. State Farm Fire & Cas. Co., 770 P.2d 704 (Cal 1989); Howell v. State Farm Fire & Cas. Co., 267 Cal. Rptr. 708 (App. 1990).  The efficient proximate cause is one that sets others in motion.  Tyler v. U.S., 929 F.2d 451 (9th Cir. 1991).  However, concurrent causation may not be used as basis for rewriting the insurance contract and will therefore not create coverage if exclusions are stated as applying if a loss results "directly or indirectly" from such a cause.  State Farm Fire & Cas. Co. v. Martin, 668 F.Supp. 1379 (C.D. Cal. 1987), aff'd, 872 F.2d 319 (9th Cir. 1989).  See also  Berry v. Commercial Union Ins. Co., 876 F.Supp. 1148 (E.D. Cal. 1995)(rejecting insured's contention that manufacturer's failure to warn was efficient proximate cause of "deterioration" damage to insured's irrigation pipes due to use of fungicide).

Without conclusively ruling whether this doctrine may be used in the liability context, the Ninth Circuit ruled in Suburban Water Systems v. National Union Fire Ins. Co. of Pittsburgh, 76 F.3d 388 (9th Cir. 1996)(unpublished) that allegations that the insured was negligent in hiring and supervising the employees who spilled pollutants was not a separate and distinct covered cause since this negligence would not have resulted in pollution but for the intertwined conduct of the employees in spilling the pollutants.

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