Court Says Ensuing Loss Requires More Than Increased Susceptibility

In Stella Property Development and Event Production, LLC v. Auto-Owners Insurance Company, 2026 WL 221489 (W.D. Pa. 2026), the United States District Court for the Western District of Pennsylvania denied summary judgment as to the applicability of the subject property policy's (i) wear and tear and (ii) inadequate maintenance exclusions, holding that those issues were to be resolved by the factfinder rather than decided as a matter of law. However, the Court further held that if (i) wear and tear and (ii) inadequate maintenance were ultimately found to be dominant and efficient causes of the roof damage, the ensuing loss clauses would not reinstate coverage because those excluded conditions merely increased the roof's susceptibility to wind damage, rather than resulting in the windstorm itself.¹

Facts

The defendant insurer issued a commercial property policy to the insured plaintiff. The policy provided that the insurer would pay for “direct physical loss of or damage” to covered property unless otherwise excluded. In pertinent part, the policy contained (i) wear and tear and (ii) maintenance exclusions. Both contained ensuing loss exceptions. Thus, if an ensuing loss provision applied, it restored coverage for the loss caused by the ensuing covered cause.

During the policy period, a windstorm occurred, which the insured claimed caused damage to its roof. Consequently, the insured submitted a claim to the insurer. After an investigation, the insurer denied coverage based on the two exclusions referenced above: “Our findings indicate that the deteriorated condition of your shingles due to decay and wear and tear are what caused the singles to dislodge. In their deteriorated state, the shingles are no longer properly bonded, sealed and secured to the roof surface and cannot resist any wind uplift.” The insured subsequently filed suit for breach of contract, among other things.

Analysis

The insured contended that coverage existed independent of the efficient proximate cause doctrine because the (i) wear and tear and (ii) maintenance exclusions contained express ensuing loss language preserving coverage where covered and uncovered causes acted concurrently. Below is the Court's analysis each exclusion.

a. Wear and tear

The policy's wear and tear exclusion stated that if wear and tear “results in a specific cause of loss,” the insurer would “pay for the loss or damage caused by that specified cause of loss.” A “windstorm” qualified as a specified cause of loss.

The insured argued that this language was “plainly designed” to address mixed causation scenarios – i.e., if an excluded condition and a covered peril combined to produce a single loss, the loss would be covered. The insurer countered that the clause applied only when the excluded condition caused the covered peril itself, which then caused distinct damage. Under that interpretation, the insured's claim would be covered only if wear and tear somehow “resulted in” a windstorm – an outcome which was nonsensical. The Court agreed with the insurer. It explained that “the ensuing loss clause applies when an excluded condition results in the peril itself, and the Policy then pays for the ‘loss or damage caused by that' ensuing peril.”

The Court also rejected the insured's argument that the insurer's reading rendered the ensuing loss clause “incapable of application.” While acknowledging that some specified causes of loss might never be triggered by wear and tear, the Court emphasized that the provision could still apply in other contexts.

Ultimately, the Court held that the ensuing loss provision did not reinstate coverage based on the theory that wear and tear merely made the roof more susceptible to wind damage.

b. Inadequate Maintenance

The Court also determined that the ensuing loss clause in the inadequate maintenance exclusion did not restore coverage. In relevant part, the exclusion provided that if inadequate maintenance “results in a Covered Cause of Loss, [the insurer] will pay for the loss or damage caused by that Covered Cause of Loss.” The Court clarified that for the ensuing loss clause to apply, the excluded condition must “result in” an otherwise covered peril that then caused separate loss or damage. The Court stated that, in Stella, inadequate maintenance may have impacted how the roof performed under windy conditions, but it did not “result in” a windstorm.

Conclusion

Stella made clear that ensuing loss provisions are not safety nets for conditions made worse by excluded causes of loss. Coverage is only restored when an excluded condition gives rise to a new, independent covered peril – not when it simply increases the property's susceptibility to damage from one. 

Footnote

1. Although the Stella decision addressed additional issues, this blog focuses solely on the Court's analysis of the ensuing loss provisions.

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