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IN THE SUPREME COURT OF THE STATE OF WASHINGTON 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

vision one, llc; and VISION TACOMA, INC.,

                             Petitioners,
              v.

PHILADELPHIA INDEMNITY INSURANCE 
COMPANY, and RSUI,
                                                                  NO. 85350-9
                             Respondents,

              and
D&D CONSTRUCTION, INC.
                             Respondent.                          EN BANC
              - - - - - - - - - -

D&D CONSTRUCTION, INC.
                             Respondent,
              v.                                                  Filed May 17, 2012

BERG EQUIPMENT and SCAFFOLDING CO., 
INC.,

                             Respondent.
              - - - - - - - - - -

MATTHEW THOMPSON,
                             Respondent,
              v.
D&D, INC., a Washington corporation; BERG 
EQUIPMENT and SCAFFOLDING CO., INC., 
a Washington corporation,

                             Respondents,
VISION ONE, LLC, a Washington limited 
liability corporation; and VISION TACOMA, -2-
INC., a Washington corporation,
                             Petitioners. 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       STEPHENS, J. -- This case involves the proper interpretation of a "resulting 

loss" clause in an all-risk insurance policy.  It also provides an opportunity to clarify 

application of the efficient proximate cause rule.  The Court of Appeals overturned a 

jury verdict in favor of the insured, reasoning that the resulting loss clause did not 

apply in the absence of a secondary covered peril that proximately caused the loss.  

The court remanded for a jury determination as to the efficient proximate cause of 

the insured's loss, holding that if the efficient proximate cause was not itself a 

covered peril, then the policy did not provide coverage.  We reverse the Court of 

Appeals.  Because the loss at issue was not excluded under the policy, coverage 

exists under the ensuing loss provision.  And, because there is no rule of law 

excluding coverage under an efficient proximate cause analysis, and the insurer is 

precluded from changing the ground for its denial of coverage, there is no basis for a 

jury to determine the efficient proximate cause of the loss.  Accordingly, we 

reinstate the judgment of the trial court.

                       FACTS AND PROCEDURAL HISTORY

       Vision One and Vision Tacoma (collectively Vision) joined forces to develop 

a condominium project in downtown Tacoma.  Vision contracted with D&D 

Construction to pour concrete for the building.   D&D in turn subcontracted with 

Berg Equipment and Scaffolding Company  to supply the shoring that would 

temporarily support the poured concrete slabs. 

       Several weeks after Berg completed the shoring installation, D&D began 

                                              -3- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

pouring concrete for the first floor.  Shortly after finishing the first section of the 

floor, the shoring underneath the concrete gave way.  The framing, rebar, and newly

poured concrete came crashing down onto the lower level parking area, where the 

wet concrete eventually hardened. It took several weeks to clean up the debris, 

repair the damage, and reconstruct the collapsed floor.

       Vision timely submitted a claim to Philadelphia Indemnity Insurance 

Company.  Philadelphia hired BT & Associates, an independent engineering firm, to 

investigate the cause of the collapse.  Following its investigation, BT & Associates 

concluded it was "more likely than not" that the collapse resulted from "[a] marginal 

shoring design" and  "[s]everal problems with the shoring installation."                Clerk's 

Papers (CP) at 6118.  Its report noted that while "[t]he marginal shoring design 

alone may not have caused the shoring to collapse," the "[marginal shoring design] 

in combination with various shoring installation problems . . . on a more likely than 

not basis, caused the shoring to collapse."  Id.

       At the time of the collapse, Vision had a builders'                  risk policy with 
Philadelphia.1 Under the policy, Philadelphia was required to "pay for direct 

physical 'loss' to Covered Property caused by or resulting from any of the Covered 

       1 One court has explained that
       "Builders' risk" insurance is a unique form of property insurance that 
       typically covers only projects under construction, renovation, or repair and 
       insures against accidental losses, damages or destruction of property for 
       which the insured has an insurable interest. The purpose of builder's risk 
       insurance is to compensate for loss due to physical damage or destruction 
       caused to the construction project itself.
Fireman's Fund v. Structural Sys. Tech., Inc., 426 F. Supp. 2d 1009, 1025 (D. Neb. 
2006) (citation omitted).  

                                              -4- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

Causes of Loss."      CP at 5973.  "Covered Property" was defined as "[Vision's] 

property or the property of others for which [Vision is] liable, consisting of: . . . . 

[m]aterials, supplies, machinery, equipment, or fixtures which will become a 

permanent part of the building, structure, or project."            Id.   The policy defined 

"Covered Causes of Loss" as "Risks of Direct Physical 'Loss' to Covered Property 

unless the 'loss' is excluded." CP at 5974. 

       The policy specifically excluded certain losses, including those "caused by or 

resulting" from deficient design or faulty workmanship.  CP at 5977, 5978. Under 

the policy, Philadelphia would not pay "for loss or damage caused by" any excluded 

event.  CP at 5971, 5976.  The policy explained when a loss was "caused by" an 

excluded event:

       Loss or damage will be considered to have been caused by an excluded 
       event if the occurrence of that event:
       (1) Directly and solely results in loss or damage; or 
       (2) Initiates a sequence of events that results in loss or damage, regardless 
       of the nature of any intermediate or final event in that sequence.[2]

Id. at 5971. "Collapse" was not listed as an excluded event.

       The exclusion for faulty workmanship contained a resulting loss clause 

providing that "if loss or damage by a Covered Cause of Loss results, [Philadelphia] 

will pay for the loss or damage caused by that Covered Cause of Loss."                   CP at 

5972, 5978.  This provision was likewise included in Vision's policy as an 

       2 This introductory paragraph was included as an endorsement to Vision's policy.  
CP at 5971.  It "recognizes our courts' use of the efficient proximate cause rule to 
determine coverage under an insurance contract."  Capelouto v. Valley Forge Ins. Co., 98 
Wn. App. 7, 20, 990 P.2d 414 (1999).  We discuss the efficient proximate cause rule 
below.

                                              -5- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

endorsement.  CP at 5972.

       Following BT & Associates' investigation into the cause of the collapse, 

Philadelphia denied Vision's claim.  The denial letter explained: 

              The damage to the construction project was a sole and direct result 
       of the marginal shoring design and faulty installation of the shoring.  The 
       policy excludes loss caused by deficiency in design and loss caused by 
       faulty workmanship.  Coverage will exist for any resulting loss caused by 
       another insured event or peril.  In this instance, the only peril, which caused 
       the loss, was defective design and faulty workmanship, therefore there is no 
       coverage for Vision One's claims.  To the extent any portion of the claim 
       can be considered a resulting loss, other policy exclusions and limitations 
       apply.

CP at 13136. 

       Vision asked Philadelphia to reconsider. Philadelphia responded by letter, 

clarifying its reason for denying the claim: 

       While the faulty workmanship exclusion contains an exception for resulting 
       loss from a Covered Cause of Loss, in [this] case, the only cause of the loss 
       was defective design and faulty workmanship. There is no separate and 
       independent loss that resulted in the claimed damage. Therefore, the faulty 
       workmanship exclusion bars coverage for this loss, and the 'resulting loss'
       provision contained therein does not apply.

CP at 13142 (emphasis omitted).

       Vision sued Philadelphia for breach of contract, bad faith, and violations of 
the Consumer Protection Act, chapter 19.86 RCW.3 As trial approached, the parties 

thoroughly briefed how they believed various policy provisions applied for purposes 

of instructing the jury.  

       3 Vision also sued D&D Construction and Berg Equipment and Scaffolding
Company but later settled with these companies.  The reasonableness of Vision's 
settlement with Berg is the subject of a separate appeal in Division Two of the Court of 
Appeals by Berg's insurer, Royal Specialty Underwriting Inc.

                                              -6- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       One of the parties' points of contention involved causation.  Vision claimed 

the collapse was caused by faulty equipment -- a covered peril under the 

policy -- while Philadelphia argued it was caused by faulty workmanship and 
defective design, which were excluded perils.4           Vision further claimed that if an 

excluded peril and a covered peril both contributed to the property damage, then the 

policy would cover the loss.  Philadelphia disagreed, arguing that in such a case,

coverage follows only if the fact finder first determines that the covered peril was 

the efficient proximate cause of the loss.  

       The trial court agreed with Vision and entered the following order: "If it is 

found that the loss was caused by one or more non-excluded event(s) in combination 

with one or more excluded event(s); the loss is covered."              CP at 6588; see also 

Verbatim Report of Proceedings (VRP) (July 18, 2008) at 18. The trial court denied 

Philadelphia's motion for reconsideration.  

       Vision and Philadelphia also disputed application of the resulting loss clause 

under the faulty workmanship exclusion.  Because the wet concrete, rebar, and 

framing were "separate" from the faulty shoring installation, the trial court held that 

damage to the concrete, rebar, and framing constituted resulting losses.  The court 

entered the following order on the resulting loss clause: 

              As a matter of law, for purposes of the faulty workmanship resulting 
       loss clause in the contract between Vision One and Philadelphia, the 
       shoring equipment is separate and distinct from the concrete, rebar and 
       wood forms. Thus, any resulting loss or damage caused by the concrete 
       collapse is covered by the policy language.

       4 The trial court ruled that the shoring was "equipment" as opposed to material.  
CP at 6588.  Philadelphia did not appeal this ruling.  

                                              -7- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

CP at 7099 -- 7100.

       Philadelphia moved for reconsideration, reiterating its argument that coverage 

under the resulting loss clause could apply only if the jury decided that faulty 

workmanship was the efficient proximate cause of the loss.  VRP (Sept. 16, 2008) 

at 10.  The trial court and Philadelphia's counsel engaged in the following colloquy:

              [Counsel]: Well, you still have to have the jury determine what 
       caused the loss, because  -- 
              The Court: I think they're going to determine the damages.  I think 
       that's where we're at.  That's what I'm having a hard time understanding.  I 
       understand the wordsmithing that's going on, but you, in your denial, say 
       it's bad installation; therefore, bad workmanship.  And I've said the 
       concrete is separate than the shoring.
              [Counsel]:  We've also said it's bad design, Your Honor. 
              The Court:  That's okay. 
              [Counsel]:  Well, it would only be okay if you decided that the only 
       thing that caused this loss was workmanship.  
              The Court:  We've been over whether there needs to be one cause or 
       two, or multiple causes.  If there is a cause that should be covered, then it's 
       all going to be covered.  
              [Counsel]:  But it's up to the jury to decide what the cause is.  What 
       if the jury says it's all design?  We don't have to prove that, but what if the 
       jury says that?  Then you don't have any resulting loss.  
              The Court:  How can they say that when you say it's installation, 
       and your expert says it's installation and it's faulty workmanship?  How 
       can I let you present that to the jury and say, well, it's not poor 
       workmanship.  
              [Counsel]: We're not going to say it's not po[or] workmanship, but 
       we're also going to say it's partly design.  Then it's up to the jury to 
       decide.

Id. at 18-19.

       The trial court disagreed with Philadelphia's position, noting that 

Philadelphia's letter denying coverage claimed the loss was caused by faulty 

workmanship as well as faulty design.  The court ruled that Philadelphia's denial 

letter precluded it from arguing that faulty workmanship was not a cause of the 

                                              -8- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

collapse.  As a result, the court held that coverage existed as a matter of law and 

that the only issues remaining for trial were causation, bad faith, and damages. 

       The case proceeded to trial, and the jury returned a verdict in Vision's favor.  

The jury awarded $251,023 in damages for losses associated with repairing and 

reconstructing the collapsed portion of the floor.  Vision did not receive damages for 

the cost of repairing the shoring, as the court had determined that the shoring loss 

was not covered under the policy.  The jury also awarded Vision $724,605 for delay 

expenses resulting from the concrete collapse.  Additional damages were awarded 

based on Philadelphia's bad faith and violations of the Consumer Protection Act.  

The trial court entered judgment for Vision in the principal amount of $1,148,428, in 

addition to attorney fees.

       Philadelphia appealed, arguing that the trial court committed legal error in its 

rulings on causation, resulting loss, and coverage.  Philadelphia also assigned error 

to the damages and attorney fees award.  Vision cross appealed, arguing that the 

trial court erred in its interpretation of the policy's extraexpense endorsement.  

Vision claimed that the court's error prevented Vision from presenting evidence of 

millions of dollars in lost profits resulting from the collapse.  

       The Court of Appeals agreed with Philadelphia that the trial court erred by 

failing to analyze coverage through the lens of the efficient proximate cause rule.  

Vision One LLC v. Phila. Indem. Ins. Co., 158 Wn. App. 91, 105, 241 P.3d 429 

(2010).  Because the parties disagreed on which of three possible perils was the 

                                              -9- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

efficient proximate cause of the loss -- faulty equipment (covered peril), defective 

design (excluded peril), or faulty workmanship (excluded peril subject to resulting 

loss clause) -- the court remanded for a jury determination of causation.  Id. at 106.  

The court also reversed the trial court's ruling on the resulting loss clause, 

interpreting this clause to require a secondary covered peril to proximately cause an 

ensuing loss.  Id. at 107.  Finding no secondary covered peril that triggered Vision's 

losses, the court reversed the trial court's coverage determination and remanded for 
a new trial.5  Id. at 111.  Vision petitioned this court for review, which we granted.  

Vision One LLC v. Phila. Indem. Ins. Co., 171 Wn.2d 1001, 249 P.3d 182 (2011). 

                                         ANALYSIS

       Interpretation of language in an insurance policy is a question of law we 

review de novo.  Allstate Ins. Co. v. Peasley, 131 Wn.2d 420, 423-24, 932 P.2d 

1244 (1997) (citing Rones v. Safeco Ins. Co. of Am., 119 Wn.2d 650, 654, 835 P.2d 

1036 (1992)).

       Courts in Washington construe insurance policies as the average person 

purchasing insurance would, giving the language "'"a fair, reasonable, and sensible 

construction."'"  Key Tronic Corp. v. Aetna (CIGNA) Fire Underwriters Ins. Co., 

124 Wn.2d 618, 627, 881 P.2d 201 (1994) (quoting  Queen City Farms, Inc. v. 

Cent. Nat'l Ins. Co. of Omaha, 126 Wn.2d 50, 65, 882 P.2d 703, 891 P.2d 718 

       5 Because the Court of Appeals reversed the judgment against Philadelphia, it did 
not reach Philadelphia's challenge to the amount of damages and attorney fees.  Vision 
One, 158 Wn. App. at 111.  Nor did it address Vision's cross appeal regarding 
interpretation of the policy's extraexpense endorsement.  Id.

                                              -10- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

(1994) (quoting Grange Ins. Co. v. Brosseau, 113 Wn.2d 91, 95, 776 P.2d 123 

(1989))).  Where a term is undefined, it is assigned its ordinary meaning.  Peasley, 

131 Wn.2d at 424.  Ambiguities in the policy are construed against the drafter-

insurer.  Queen City Farms, 126 Wn.2d at 68 (citing Greer v. Nw. Nat'l Ins. Co., 

109 Wn.2d 191, 201, 743 P.2d 1244 (1987)).  Because "[e]xclusions from insurance 

coverage are contrary to the fundamental protective purpose of insurance," we 

construe exclusions strictly against the insurer.  State Farm Fire & Cas. Co. v. Ham 

& Rye LLC, 142 Wn. App. 6, 13, 174 P.3d 1175 (2007) (citing Stuart v. Am. States 

Ins. Co., 134 Wn.2d 814, 818-19, 953 P.2d 462 (1998)).  "[W]e will not extend 

[exclusions] beyond their clear and unequivocal meaning."  Id.  
       The policy here was an all-risk policy with a resulting loss clause. 6          Because 

an understanding of how all-risk coverage and resulting loss provisions operate is 

necessary to our analysis, we describe these concepts before analyzing the particular 

provisions at issue.
                               All-Risk Insurance Coverage

       Property insurance policies generally fall into two categories: named-peril and 

all-risk.  In insurance parlance, "'"perils" . . . refers to fortuitous, active, physical 

forces such as lightning, wind, and explosion, which bring about the loss.'"  Garvey 

v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 406, 257 Cal. Rptr. 292, 770 P.2d 

704 (1989) (quoting Michael E. Bragg, Concurrent Causation and the Art of Policy 

       6 Resulting loss clauses are sometimes denominated ensuing loss clauses.  The 
distinction is simply a matter of different wording among insurance policies.  There is no 
legal significance to using one phrase over the other.

                                              -11- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

Drafting:  New Perils for Property Insurers, 20 Forum 385, 386-87 (1984-1985)).

       "'Named perils' or 'specific perils' policies provide coverage only for the 

specific risks enumerated in the policy and exclude all other risks."             Steven Plitt, 

Daniel Maldonado & Joshua D. Rogers, Introductory Concepts of the Risk; Public 

Policy Insurability, and Causation, in 7 Couch on Insurance 3d § 101:7, at 101-17 

(2006).  All-risk policies, on the other hand, "provide coverage for all risks unless 

the specific risk is excluded."  Id.; see also Findlay v. United Pac. Ins. Co., 129 

Wn.2d 368, 378, 917 P.2d 116 (1996) (noting that in an all-risk policy, "any peril 

that is not specifically excluded in the policy is an insured peril"); Villella v. Pub. 

Emp. Mut. Ins. Co., 106 Wn.2d 806, 816, 725 P.2d 957 (1986) (noting that "[i]n the 

case of all risk homeowners insurance, the peril insured against would be any peril 

that is not specifically excluded");  McDonald v. State Farm Fire & Cas. Co., 119 

Wn.2d 724, 731 n.5, 837 P.2d 1000 (1992) (describing all-risk insurance as "'a 

promise to pay upon the fortuitous and extraneous happening of loss or damage . . . 

from any cause whatsoever, . . . except when occasioned by the wilful or fraudulent 

act or acts of the insured'" (alterations in original) (quoting 2 Warren Freedman, 

Richards on the Law of Insurance § 212 (5th ed. 1952))). 

       All-risk policies generally allocate risk to the insurer, while specific peril 

policies place more risk on the insured.  Gust K. Newberg Constr. Co. v. E.H. 

Crump & Co., 818 F.2d 1363, 1364 (7th Cir. 1987) ("[U]nder an 'all risk' policy, 

the insurer bears the risk that a catastrophe not mentioned in the policy will occur; in 

                                              -12- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

a 'specified peril' policy, the insured bears that risk."); Frank Coluccio Constr. Co. 

v. King County, 136 Wn. App. 751, 767, 150 P.3d 1147 (2007) (noting that the 

purpose of all-risk builder's insurance "is to shift the risk of loss away from the 

contractor and the owner and to place it upon an insurer").  

       In both types of property insurance, coverage is commonly triggered -- or 

excluded -- when a specified peril "causes" a loss.   See Garvey, 48 Cal. 3d at 406.  

That is, a property insurance policy might provide that it does not insure or cover 

"loss caused directly or indirectly by" an enumerated peril.  E.g., Wright v. Safeco 

Ins. Co. of Am., 124 Wn. App. 263, 273, 109 P.3d 1 (2004).  
                                        Ensuing Loss

       While coverage may be excluded when a certain peril causes a loss, a 

resulting or ensuing loss clause operates to carve out an exception to the policy 

exclusion.  McDonald, 119 Wn.2d at 734; Capelouto v. Valley Forge Ins. Co., 98 

Wn. App. 7, 16, 990 P.2d 414 (1999).  For example, a policy could exclude losses 

"caused directly or indirectly" by the peril of "defective construction," but then an 

ensuing loss provision might narrow the blanket exclusion by providing that "any 

ensuing loss not excluded is covered."  E.g., Wright, 124 Wn. App. at 273.  

       In this way, ensuing loss clauses limit the scope of what is otherwise 

excluded under the policy.  Such clauses ensure "that if one of the specified 

uncovered events takes place, any ensuing loss which is otherwise covered by the 

policy will remain covered.  The uncovered event itself, however, is never covered."  

                                              -13- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

McDonald, 119 Wn.2d at 734.

       An example helps illustrate how the ensuing loss clause works.  Suppose a 

contractor miswires a home's electrical system, resulting in a fire and significant 

damage to the home.  And suppose the homeowner's policy excludes losses caused 

by faulty workmanship, but the exclusion contains an ensuing loss clause.  In this 

situation, the ensuing loss clause would preserve coverage for damages caused by 

the fire.  But it would not cover losses caused by the miswiring that the policy 

otherwise excludes.  Nor would the ensuing loss clause provide coverage for the 

cost of correcting the faulty wiring.  

       Ensuing loss clauses may not cover losses that are otherwise excluded. For 

example, in Wright, 124 Wn. App. at 267, 276, the Court of Appeals held that an 

ensuing loss provision did not provide coverage when the insured's condominium 

unit was damaged by mold after defective construction allowed water to seep 

through the walls.  While the policy excluded losses caused by defective 

construction and mold, id. at 273, 276, the defective construction exclusion stated 

that "'any ensuing loss not excluded or excepted in this policy is covered,'"  id. at 

273 (emphasis omitted).  Although mold damage arguably would have been covered 

under the ensuing loss clause, the fact that the policy excluded all losses caused by 

mold was dispositive.  Id. at 274-75.  Accordingly, the Court of Appeals held that 

the ensuing loss clause did not operate to provide coverage for a specifically 

excluded loss.  Id.

                                              -14- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       Similar reasoning was followed in Allianz Insurance Co. v. Impero, 654 F. 

Supp. 16 (E.D. Wash. 1986).  The policy at issue excluded losses caused by 

defective construction but covered damage "resulting from" faulty or defective 

construction.  Id. at 17. The insured sought coverage for the cost of repairing poorly

constructed concrete walls.  Id.          The court held that this loss fell within the 

exclusion, and not the ensuing loss clause, because "[t]he defective concrete caused 

no damage to any other portion of the structure, other persons or property."  Id. at 

18.  The court suggested that if "the wall, as a result of the deficiencies in the 

concrete, [had] collapsed and caused damage to some other portion of the work, or 

to equipment of a subcontractor or some similar thing," the outcome would be 

different.  Id.  

       As these cases illustrate, the dispositive question in analyzing ensuing loss 

clauses is whether the loss that ensues from the excluded event is covered or 

excluded.  If the ensuing loss is also an excluded peril or an excluded loss under the 

policy, there is no coverage.  See, e.g.,            Wright, 124 Wn. App. at 274-75; 

McDonald, 119 Wn.2d at 734.  But if the policy covers the peril or loss that results 

from the excluded event, then the ensuing loss clause provides coverage.   

       Because an all-risk policy covers any loss that the policy does not expressly 

exclude, it is important to read the ensuing loss clause in the context of the coverage 

that was contemplated by the parties.  One court colorfully described how absurd 

results could otherwise follow: 

              As an "all-risk"     policy, this insurance policy basically covers 

                                              -15- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       everything unless specifically excluded. That means the number of 
       possibilities for last-in-time "but for" causes of damage are limited only by 
       the imagination of the reader. . . .  What if faulty construction allows humid 
       summer air to enter the building, which rusts metal fixtures  But for the 
       exposure to the summer air, no damage to the fixtures would have occurred. 
       Yet the contract does not exclude damages caused by "air." Coverage? 
       What if a poorly constructed ceiling beam falls, smashing the floor below? 
       But for the force of gravity, no damage to the floor would have occurred. 
       Yet the contract does not exclude damages caused by "gravity." Coverage? 

TMW Enters., Inc. v. Fed. Ins. Co., 619 F.3d 574, 576-77 (6th Cir. 2010) (citation 

omitted).  In sum, we look to the language of the policy to ensure that the parties 

contemplated coverage for the ensuing loss.  

       With these considerations in mind, we turn to the policy language at issue.
                                       Vision's Policy

       Here, Vision purchased an "all-risk" policy: it covered losses to the building 

"caused by or resulting from" any peril unless the loss was excluded.  Excluded 

losses included those "caused by or resulting from" defective design and faulty 

workmanship,  but the faulty workmanship exclusion contained an ensuing loss 

exception. Vision sought coverage for what it claims was the ensuing loss from the 

collapse: the clean-up, repair, and reconstruction of the collapsed concrete floor.  

Thus, we first examine the policy language to determine whether coverage exists for 

the ensuing loss.  

       Ensuing Loss Clause

       Under the ensuing loss clause, damages resulting from faulty workmanship 

are covered if they are caused by an otherwise covered event.  Because Vision 

sought coverage for losses associated with the collapse of the floor resulting from 

                                              -16- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

faulty workmanship, we consider whether "collapse" was covered under the policy. 

       The all-risk policy did not exclude the peril of collapse. Moreover, it 

affirmatively appears the parties intended coverage for collapse. For example, one 

section in Vision's policy excludes losses "caused by or resulting from" the peril of 

"[r]ain, snow, sleet, or ice."     CP at 5977.  This exclusion is followed by a clause 

stating,  "But we will pay for 'loss' . . . [c]aused by collapse of the building or 

structure resulting directly from the weight of rain, snow, sleet, or ice."   Id.  

(emphasis added).  The risk of collapse is, of course, at its highest during the 

construction phase of a building project -- and this is an all-risk builder's policy.  

Philadelphia does not argue that collapse was a risk beyond the reasonable 

contemplation of the policy.

       Despite this, the Court of Appeals found no coverage under the ensuing loss 

clause, reasoning that "[i]f faulty workmanship was the initial excluded peril, then 

the simultaneous collapse of the shoring and concrete slab was the loss. Had the 

collapse triggered a secondary covered peril, such as a fire, then damage caused by 

the fire would be covered as a resulting loss."  Vision One, 158 Wn. App. at 108 

n.3.  This analysis fails to consider that collapse is a covered peril under the policy. 

Many events can be characterized as both a loss and a peril. Characterizing collapse 

as the loss, rather than the peril, rests on a semantic distinction without a difference 

and ignores the policy's coverage for all risks, including those "[c]aused by collapse 

of the building." CP at 5977.  

                                              -17- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       Indeed, the situation here is no different than if the shoring had given way, 

scraped a wall as it fell, and sparked a fire.  The faultily assembled shoring 

(excluded) would have caused a fire (covered), resulting in damage to the 

building -- a loss admittedly covered under the ensuing loss clause.  In fact, 

Philadelphia's coverage expert acknowledged at trial that there is no meaningful 

difference between a fire loss and a collapse loss under the ensuing loss clause.  

VRP (Oct. 13, 2008) at 1242-43.  We agree, and hold that the collapse damages are 

a covered ensuing loss under the policy.  

       Causation and the Efficient Proximate Cause Rule

       Although collapse damages are covered under the faulty workmanship 

resulting loss clause, Philadelphia contends we must remand for the jury to 

determine whether the damages were in fact caused by faulty workmanship.  In 

Philadelphia's view, the resulting loss clause applies only if the jury finds that faulty 

workmanship was the efficient proximate cause of the loss.  If the                     efficient 

proximate cause was defective design -- an excluded peril without an ensuing loss 

clause -- Philadelphia contends coverage must be denied.

       Philadelphia's argument persuaded the Court of Appeals, which held that the 

trial court was required to submit the causation issue to the jury under the efficient 

proximate cause rule.  Vision One, 158 Wn. App. at 106.  The court determined that 

Philadelphia was not precluded by its denial letter, which stated that the damage 

resulted from faulty workmanship and  defective design, from raising efficient 

                                              -18- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

proximate cause because it "is a rule of insurance contract construction, not a new 

ground for denying coverage."  Id. at 103.  Reasoning that the jury did not have an 

opportunity to apply the efficient proximate cause rule, the Court of Appeals 

remanded on the issue of causation. 

       This analysis misses the mark for several reasons.  First, the Court of Appeals 

misapprehended the efficient proximate cause rule.  The efficient proximate cause 

rule is a rule of law, but not as the Court of Appeals described.  The efficient 

proximate cause rule applies only when two or more perils combine in sequence to 

cause a loss and a covered peril is the predominant or efficient cause of the loss.  

McDonald, 119 Wn.2d at 732; Kish v. Ins. Co. of N. Am., 125 Wn.2d 164, 170, 883 

P.2d 308 (1994).  In such a situation, the efficient proximate cause rule mandates 

coverage, even if an excluded event appears in the chain of causation that ultimately 

produces the loss.  Safeco Ins. Co. of Am. v. Hirschmann, 112 Wn.2d 621, 628, 773 

P.2d 413 (1989).  The efficient proximate cause rule operates as an interpretive tool 

to establish coverage when a covered peril "sets other causes into motion which, in 

an unbroken sequence, produce the result for which recovery is sought."  

McDonald, 119 Wn.2d at 731.   

       The opposite proposition, however, is not a rule of law.  When an excluded 

peril sets in motion a causal chain that includes covered perils, the efficient 

proximate cause rule does not mandate exclusion of the loss.  Key Tronic Corp., 

124 Wn.2d at 626.  We explained in Key Tronic Corp.:

              The insurer here reasons that the converse of this rule should apply, 

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Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       i.e., where an excluded risk sets in motion a causal chain, coverage should 
       be precluded as to all the causal events in the chain.  As Key Tronic aptly 
       points out, however, the efficient proximate cause rule operates in favor of 
       coverage.  A converse rule would, of course, operate in favor of no 
       coverage.  Other than maintaining that the efficient proximate cause rule 
       should apply to excluded acts which are the efficient proximate cause, and 
       that it is "settled law", the insurer offers no other reasoning why the rule 
       should be applied to preclude coverage.  Because policies should normally 
       be construed in favor of coverage, because there is no settled law favoring 
       this argument, contrary to the insurer's claim, and because the insurer does 
       not offer any further justification or authority supporting such a rule, we 
       decline to adopt the rule urged by the insurer.

Id.

       We have left open the possibility that an insurer may draft policy language to 

deny coverage when an excluded peril initiates an unbroken causal chain.  Findlay, 

129 Wn.2d at 376.  But a policy provision is not the same as a controlling rule of 

insurance contract interpretation.  A provision must be asserted as a basis for 

denying coverage, and during litigation insurers may be precluded from asserting 

new grounds for denying coverage.  Hayden v. Mut. of Enumclaw Ins. Co., 141 

Wn.2d 55, 63, 1 P.3d 1167 (2000).  Here, the trial court ruled that Philadelphia 

could not assert grounds for denying Vision's claim other than those raised in its 

denial letter.  CP at 5723.  This order was not appealed. 

       In accordance with the trial court's order, coverage must be determined under 

the policy language Philadelphia relied upon when it denied coverage. Under the 

policy, loss or damage is considered to have been "caused" by an excluded event in 

two instances: (1) when the excluded event "[d]irectly and solely" causes the loss or 

damage or (2) when the excluded event "[i]nitiates a sequence of events that results 

in loss or damage . . . ." CP at 5971.  But in its denial letter, Philadelphia stated that 

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Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

the collapse was "a sole and direct result of the marginal shoring design and faulty 

installation of the shoring."    CP at 13136.  This letter makes clear that Philadelphia 

relied on the first causation prong, and not the "sequence of events initiated by an 

excluded event" prong.

       While this second prong (i.e., when the excluded event "[i]nitiates a sequence 

of events that results in loss or damage") may permit the sort of inverse efficient 

proximate cause analysis we allowed for in Findlay, Philadelphia never invoked this 

clause in denying Vision's claim.  Causation is properly analyzed in accordance 

with the policy provision invoked in Philadelphia's denial letter.  Therefore, 

Philadelphia is precluded from arguing the second prong of causation, i.e., that 

defective design may have initiated a sequence of events resulting in loss or damage. 

       The Court of Appeals erred when it turned to the efficient proximate cause 

rule to override the trial court's decision.  The trial court correctly determined 

causation as a matter of law because Philadelphia consistently maintained that faulty 

workmanship and defective design combined to "directly and solely" cause the loss, 

and it offered no evidence which would allow a jury to find that the loss was caused 

directly and solely by faulty design.  Because there is coverage under the faulty 

workmanship exclusion in light of the ensuing loss clause, as a matter of law 

Vision's loss was not caused "directly and solely" by an excluded peril.  The trial 
court correctly ruled that Vision's loss from the collapse is covered.7

       7 Vision argued that faulty equipment, a covered peril, also caused the loss, but 
this issue never went to the jury, and we do not reach it.  

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Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       Even if we allowed Philadelphia to belatedly rely on the "sequence of events"

causation clause in its policy, nothing in the record supports its application here.  

The language allows for a denial of coverage when an excluded peril "initiates a 

sequence of events" in a causal chain, resulting in the loss.  The record does not 

show the defective design of the shoring initiated a causal chain of events.  To the 

contrary, the engineering reports Philadelphia relied upon indicated that both 

inadequate design and poor installation caused the shoring to fail.  To the extent 

defective design and faulty workmanship combined to cause the loss, they acted as 

concurrent causes; there is no indication the faulty design caused the faulty 

workmanship.  In short, the trial court's ruling on causation was correct, and there is 

no issue of fact for the jury meriting remand.  We therefore reverse the Court of 

Appeals.
       Extraexpense Endorsement

       In its cross appeal, Vision contends the trial court erred in interpreting the 

policy's extraexpense endorsement to preclude Vision from presenting evidence of 

millions of dollars of delay losses following the collapse.  The extraexpense 

endorsement provided $1 million in coverage for certain losses "incur[red] as the 

result of the project being delayed," when the delay is "directly caused by any of the 

Covered Causes of Loss." CP at 5985.  The endorsement provided a list of covered 

losses, including "[c]onstruction loan interest," "[r]eal estate and property taxes,"

and "[l]egal and accounting fees."  Id.    

                                              -22- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

       The trial court concluded that these soft costs listed in the extraexpense 

endorsement were limited to the $1 million amount provided in the endorsement 

because the general policy -- which had a $ 12.5 million limit -- did not cover these 

soft costs.  Vision claims the trial court erred because the losses listed in the 

endorsement were included in the policy's general grant of coverage.  Vision argues 

the extraexpense endorsement was designed to provide an additional $1 million for 

the specified delay losses in the event the $12.5 million limit was exhausted.  

       Vision's policy covered "direct physical 'loss' to Covered Property" caused 

by a covered peril.  CP at 5973.  The soft costs listed in the extraexpense 

endorsement were neither "physical" losses nor losses to covered "property."

Nevertheless, Vision claims that because soft costs were not excluded under the 

policy, they were covered.  Vision argues that the policy's exclusion of losses 

"caused by or resulting from . . . [d]elay . . . or any other consequential loss," CP at 

5977, applied only to physical losses, not financial losses.  

       Vision's argument fails because it wrongly assumes the policy covered 

financial losses in the first instance.  While Vision's policy was an all-risk policy, 

coverage extended only to "physical" losses to covered "property." CP at 5973.  It 

is of no consequence that soft costs were not specifically enumerated under the 

delay-and-consequential-loss exclusion.  Because the policy did not cover soft costs, 

there was no need to exclude them.  While the extraexpense endorsement provided 

coverage for certain financial losses resulting from the delay, the endorsement 

                                              -23- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

limited coverage to $1 million.  We affirm the trial court on this issue.

                                        Attorney Fees

       Vision requests attorney fees on appeal.  Because it has demonstrated 

coverage under the policy, Vision is entitled to fees under Olympic Steamship v. 

Centennial Insurance Co., 117 Wn.2d 37, 51-54, 811 P.2d 673 (1991). 

                                              -24- 

Vision One, LLC, et al. v. Philadelphia Indem. Ins. Co., et al., 85350-9

                                       CONCLUSION

       The trial court correctly ruled that Vision is entitled to coverage under its 

builders' risk policy with Philadelphia.  While the policy excludes losses caused by 

faulty workmanship, the ensuing loss clause at issue covers the collapse damages. 

Accordingly, we reverse the Court of Appeals and reinstate the trial court's 

judgment.  We also award Olympic Steamship fees to Vision.

AUTHOR:
       Justice Debra L. Stephens

WE CONCUR:
       Chief Justice Barbara A. Madsen                  Justice James M. Johnson

       Justice Charles W. Johnson                       Gerry L. Alexander, Justice Pro Tem.

       Justice Tom Chambers                             Kevin M. Korsmo, Justice Pro Tem.

       Justice Susan Owens

       Justice Mary E. Fairhurst

                                              -25-