In Album Realty Corp. v. American Home Assur. Co., 80 NY2d 1008 , a sprinkler head froze and ruptured, causing flooding and water damage to the sub-basement of the insured premises.
The applicable policy excluded coverage for damage caused by freezing. The Court of Appeals held that freezing was not the proximate, efficient and dominant cause of the damage for purposes of the exclusionary clause, even though the water damage would not have occurred in the absence of freezing, and the presence of the water could best be explained by the rupturing of the frozen sprinkler head.
Noting that the loss was "visibly occasioned by water damage," the Court of Appeals held that "only this most direct and obvious cause should be looked to."
The Court reasoned that "[a] reasonable business person would conclude in this case that plaintiff's loss was caused by water and would look no further for alternate causes." (Album Realty, 80 NY2d at 1010-1011.)