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The test asks “but for ‘X’ would ‘Y’ have occurred and can be applied for claims ranging from business interruption to property damage losses. (Credit: Carlos Herrera/Bloomberg) The test asks “but for “X” would “Y” have occurred and can be applied for claims ranging from business interruption to property damage losses. (Credit: Carlos Herrera/Bloomberg)

Editor’s Note: As we kick off our series on wide area damage, it is important to note that the discussion upon which this series is based took place prior to the FCA test case ruling in the U.K. that challenged the Orient Express Hotels v Generali judgment on concurrent causation. With that in mind, viewpoints post-FCA ruling are noted as such. As the appeals process in the FCA test case unfolds, this perspective may prove useful, as will the information presented about the “but for” test from the perspective of measuring indemnifiable business interruption loss.

The “but for” test is a commonly used paradigm to determine the legal or proximate cause of an injury or loss. In cases of wide area damage caused by hurricanes and other natural disasters, the ‘but for’ test often comes into play as there are often many factors at hand when an insured suffers a loss under these circumstances.

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