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What Is a “Sole Cause” Provision?

Many accident liability insurance policies have very clear guidelines as to which events may qualify for claims. One issue that may cause problems for claimants is the concept of a “sole cause” provision. A sole cause provision may state something like, “this policy covers an accidental injury that is the direct and sole cause of a covered loss,” meaning that the claimant must prove that his or her claim falls strictly within the scope of the policy in question. If there are any other factors that contributed to a claimant’s claimed losses, the insurer may use these facts as grounds to deny a claim or reduce a settlement payout.

Consider the following example: a woman with advanced diabetes suffers an injury in a car accident. The accident leads to a serious injury on the woman’s leg, and due to her diabetes, the attending physician decides that amputation is the only realistic solution. The woman files an accidental death & dismemberment insurance claim for the resulting medical expenses, but the insurance carrier denies the claim because of a sole cause provision. If the woman’s preexisting condition had not been a factor, the amputation may not have been necessary, therefore the root cause of the claim exceeds the scope of a “sole and direct” cause.

The Importance of Policy Wording

The actual text of an insurance policy is a critical factor when it comes to sole cause provisions. According to a ruling from the Ninth Circuit Court of Appeals, the language of the sole cause provision in an insurance policy may be either conspicuous, meaning its very clearly outlined in the contents of the policy, or inconspicuous, indicating the sole cause provision may be part of a larger set of clauses without clear indications that it is indeed a sole cause provision.

According to the Ninth Circuit ruling, if a sole cause provision qualifies as “conspicuous,” then “sole cause” translates to “independent of other substantial causes.” If the wording counts as “inconspicuous,” then the sole cause provision means “independent of any other predominate or proximate cause.” Essentially, the Ninth Circuit ruled that a “sole and direct” cause listed in an accident plan does not mean the claimed accident must be the “sole and direct” cause of the claimed loss.

It’s crucial that all insurance policyholders understand all of the terms, conditions, and clauses that may impact a future claim. A claimant may assume an event qualifies for coverage only to find that a secondary factor excludes the event from the policy’s terms. While it can be frustrating to navigate these clauses, an experienced attorney can help an injured individual understand the scope of his or her available coverage. An attorney can also help in the event that an insurance carrier or claims adjuster acts in bad faith with a policy.

What Is Bad Faith for a Sole Cause Provision?

Insurance companies have a legal duty to develop robust investigation and processing structures for handling claims. When it comes to sole cause provisions, an insurance carrier has an obligation to fully investigate the claim to ensure it falls within the guidelines of such provisions and a fiduciary duty to honor the claim if it does. When insurance companies fail to fully investigate claims, neglect to investigate claims at all, or unjustifiably delay the processing of valid claims, these actions constitute insurance bad faith.