De Bruyn v. Superior Court

A homeowner with an “all-risk” homeowners insurance policy returned home from vacation to find that a toilet had overflowed, causing significant water damage to his home. As a result of the water damage, the house became contaminated by mold. The homeowner made a claim under the policy for all of the damage, including the mold damage. Although the policy covered losses resulting from a sudden and accidental discharge of water from plumbing or household appliances, the insurer denied the claim for the mold damage based upon terms in the policy that provide that any loss resulting from mold is always excluded, however caused.

The question raised in this original proceeding in mandate is whether the insurer may rely upon the “absolute” mold exclusion to deny coverage for mold damage resulting from the covered discharge of water, in light of Insurance Code section 530, which incorporates into California law the efficient proximate cause doctrine. Under that doctrine, “ ‘[w]hen a loss is caused by a combination of a covered and specifically excluded risks, the loss is covered if the covered risk was the efficient proximate cause of the loss,’ but ‘the loss is not covered if…