When two or more independent dangers operate at the same time (i.e., concurrently) to produce a loss, the proximate cause is (1) the cause having the most substantial impact in bringing about the loss under a first-party property insurance policy.
What is the meaning of proximate cause?
The activities of the person (or entity) who owes you a duty must be sufficiently related to your injuries for the law to regard the person to be legally responsible for your injuries. Someone’s acts are not proximate if they are a distant source of your injury.
What is an example of proximate cause?
The following questions should be examined when determining if a cause is proximate:
- Could the plaintiff have predicted that the defendant’s acts would cause them harm?
In West Virginia, comparative blame can only be shown if proximate causation exists, according to 55-7-13a. In West Virginia, the comparative fault has been changed. This indicates that a person’s ability to recover damages is based on their percentage of fault. For example, if a premises liability victim is judged to be 20 percent at blame for their accident, they can only demand reimbursement for 80 percent of their damages.
Examples of Proximate Cause in a Personal Injury Case
Proximate causation exists when injuries occur solely as a result of a person’s activities. If a driver injures someone after running a red light and colliding with a car that had a green light, the driver had a responsibility to not run the red light. Their acts directly, and hence proximally, caused the other driver’s injuries.
However, not all personal injury lawsuits have a proximate cause. The cause of their accident would be remote if, for example, the motorist stated above swerved to avoid the irresponsible driver but later wrecked a few blocks away due to a stress reaction from the almost-accident.
How is proximate cause determined in an insurance contract?
Last week, a friend contacted to tell me that his laptop had been stolen, and that despite having laptop insurance, he did not have theft coverage. He called back a few hours later. Police had discovered the laptop. However, the robber had destroyed it. “Thank God,” he said, “I’m now going to file a claim with the insurer for the repair.” But he was dismayed when I told him that because “theft” was the proximate cause of the loss and an excluded risk, the insurance company would not pay the claim.
In my friend’s situation, the laptop was stolen, and the robber completely destroyed it. The ‘proximate cause’ was theft. Because my friend’s insurance policy did not cover theft, the insurance company refused to pay the claim.
Fire, earthquake, explosion, dangers of the sea, war, riot, civil unrest, and other perils can be insured against, and insurance policies covering numerous combinations of hazards can be obtained. Certain of these risks are commonly covered by insurance policies, but some perils are expressly excluded from coverage, implying that those excluded perils are not covered. Only if the cause of the loss is a risk covered against but not an expressly excluded or other peril does the insurer become liable under the policy.
A number of events and conditions come together to achieve a specific outcome. As a result, when there are several events that led to the loss, uncertainty reigns supreme. The doctrine of proximate causality can aid here. Proximate cause, or Causa Proxima in Latin, refers to the reason of a loss in that the risk insured against must be covered under the insurance contract (policy), and the dominating cause of the occurrence cannot be excluded. No insurance claim can be successful unless the loss was caused directly by a risk covered by the policy.
If the loss is caused by a single incident, there will be no difficulty in determining liability. But, in most cases, the loss is the result of two or more causes operating in concert or in sequence, i.e. one after the other. In such circumstances, it is crucial to determine the most important, most effective, and most powerful cause of the loss. All other causes are regarded “remote” in comparison to this “proximate cause.”
“The active efficient cause that puts in motion a chain of events that bring about a result without the participation of any force starting and operating actively from a new and independent source,” according to the definition of proximate cause.
There are three types of dangers that can result in an insurance claim:
a) Insured perils: As a possible source of loss or damage to the subject matter of the insurance, insured perils are specifically stated and covered in the policy. A policy can be purchased, for example, to protect the subject matter against risks such as fire, lightning, storms, and theft.
b) Excepted or excluded dangers: Almost all insurance plans exclude certain perils originating from circumstances that can cause losses from coverage. In most cases, a separate section of the contract outlines and describes all of the risks that are not covered, such as riots, strikes, earthquakes, and war.
b) Uninsured and other risks: These perils are not addressed at all in the policy. In a fire policy, smoke and water cannot be excluded or stated as insured.
APPLICATION OF THE DOCTRINE IN REAL LIFE: Because loss might be produced by numerous events occurring simultaneously or one after the other, determining the proximate cause is not an easy or simple operation. Furthermore, the insured peril, the excluded hazard, and the uninsured peril must all be distinguished.
When a claim is based on a single cause, the problem is straightforward. The claim is payable if the cause is insured; otherwise, the claim is not payable if the cause is uninsured or excluded. For example, an insured property is burned down by an unintentional fire; as fire is an insured danger, the loss is covered.
A loss can sometimes be produced by the simultaneous action of many perils (Insured, Uninsured, or Excluded), and it can be difficult to separate their effects. Each reason must be distinct from the others and contribute to the loss.
If no prohibited peril is present, and one of the causes is an insured peril, the remaining causes may be uninsured perils, making the insurers liable under the policy’s terms. For example, suppose a house is damaged by a storm (Excluded Peril) and a fire breaks out during the storm (Insured Peril) due to an entirely separate reason. There is no claim if the consequences cannot be separated.
There is no liability when an insured peril and an excluded peril work together to cause a loss, and the consequences of the excluded peril’s operation cannot be isolated from the effects of the insured peril’s operation. For example, if a burglary policy excludes riot risk, there is no obligation for claims for property robbed by rioters under the policy.
There is liability for the loss caused by the covered peril if one of the perils is an excluded peril and its effects may be separated from the outcomes of the operation of insured perils. Hides, for example, might be covered by a marine policy against ‘all hazards,’ but not against thermal damage. If the hides are damaged by water, the property may be depreciated in part due to moisture in the vessel’s hold and partially due to hair on the hides slipping due to warmth. It is possible to recover moisture damage if it can be separated and identified. If this is not practicable, however, no culpability exists.
UNBROKEN SEQUENCE (SUCCESSIVE CAUSE) IN THE DIRECT CHAIN OF EVENTS: When numerous occurrences occur in a continuous sequence and there is no excluded risk, the insurers are responsible for all losses caused by the insured peril. Example: A ship carrying hides and tobacco shipped a large amount of sea water, which rotted the hides but did not come into direct touch with the tobacco or the packaging in which it was shipped; yet, the tobacco was damaged by the putrid hides’ stench. The risks of the sea were the direct cause of the loss of both tobacco and hides in this case. Another example: a truck driver, while parked, destroyed a garment factory’s wall (uninsured danger). The destroyed wall collapsed inside the facility and damaged electrical wiring, which short-circuited and sparked, resulting in a factory fire (insured danger). The insurer is only responsible for losses caused by the fire. Another example: Sparks sparked a fire (insured hazard) in a textile mill due to short-circuiting and sparks. The fire department used water hoses to put out the fire, but the water caused damage (uSn-insured peril) to the non-burned contents. The insurer is responsible for all losses (fire, water, and other damage) caused by the fire.
There is no claim if an excluded hazard occurs before an insured peril, the latter being the reasonable and likely consequence directly and naturally coming from the excluded peril. An enemy aircraft delivered an incendiary bomb, which set fire to a warehouse. Fire caused the loss, but the immediate cause was enemy activity, which is not covered by the policy. As a result, the insured was unable to collect the loss.
If an insured risk is followed by an excluded peril, the insurer is not liable if the losses are indistinguishable. However, if the loss is identifiable, the insurer is responsible for the damage produced by the insured risk until the excluded peril occurs. For example, if a fire causes an explosion and the explosion is an excluded peril, the insurer will be liable for fire damage up to the time of the explosion if the fire damage is distinguishable, meaning the original fire damage is recoverable but the explosion damage and subsequent fire damage are not.
BROKEN SEQUENCE: INTERRUPTED CHAIN OF EVENTS: If a new and independent cause interrupts the sequence of events, liability will be determined by whether the new cause is an insured risk or an excluded peril. It indicates that if an excluded peril occurs before an insured peril occurs as a new and independent cause, there is a valid claim for loss caused by the occurrence of an insured peril. If an insured peril is followed by the occurrence of an excluded peril as a separate and distinct cause, the claim is payable, but only for the loss or damage caused by the excluded peril. Example: The insured had an insurance that covered plate glass breakage, but the contract did not cover fire damage. Following a fire in a nearby building and a throng forming, certain individuals shattered the insured’s windows in order to raid his store. The occurrence of the fire was clearly the remote cause of the damage to the windows in this case; nevertheless, another event intervened. The mob’s aggression was the proximate cause of the damage, and the insurers were deemed liable under the policy.
Because this is a question of fact involving individual circumstances, there are no hard and fast standards for determining the proximate cause of a loss. The proximate cause should be found using common sense ideas that are understandable to the average person. As one wise judge put it, “Ask a man on the street, not a scientist or a lawyer, if you want to know what the proximate cause is. His response will most likely be correct.” Instead of making the notion of proximate causality complex, this comment makes it simple to understand.
The author, who is also a Guest Faculty member of Southeast University and Bangladesh Insurance Academy in Dhaka, is a Deputy Managing Director of Pioneer Insurance Company Limited.
What are the two components of proximate cause?
Actual cause (which addresses the question of who was the actual cause of the harm or other loss) and legal cause are the two components of proximate cause (which answers the question of whether the harm or other loss was the foreseeable consequence of the original risk).
What is proximate cause in marine insurance?
The essential principles of Marine Insurance are extracted from the Marine Insurance Act of 1963*, as are the fundamental principles of Indemnity, Insurable Interest, Utmost Good Faith, Proximate Cause, Subrogation, and Contribution in all property insurance contracts. When negotiating contracts and settling claims under contracts, marine insurance practitioners must be familiar with the Act and uphold these Principles.
The goal of an insurance contract is to put the insured in the same relative financial position that he would have been in if the loss had not occurred.
The indemnity given by the Marine Insurance Act is “in the agreed-upon method and to the agreed-upon extent.” A+ “As a result, a “commercial” indemnity is granted. Because insurers cannot guarantee that cargo will be reinstated or replaced in the event of loss or damage, they pay a pre-agreed quantity of money to give adequate compensation. In reality, this is accomplished by agreeing on the insured value in advance, based on the CIF value of the goods, to which it is typical to add a ten percent margin to cover general overheads and possibly a profit margin on the transaction.
The sum insured is paid in full if the entire cargo is destroyed by an insured risk, and if just a portion of the cargo is destroyed, the corresponding proportion of the insured value is paid.
Damage claims are resolved by calculating the percentage of depreciation and multiplying it by the insured value. The percentage of depreciation is determined by comparing the value of the products in their damaged state to their gross sound value on the selling date. To avoid distortion of the result due to market price movements, both values are calculated on the same date.
It is common practice in the marine insurance industry to provide policies with an agreed value. Except in the case of an inadvertent error or when fraud is asserted, the agreed value is conclusive between the Insurer and the Assured.
Policies such as “Duty” and “Increased Value” are not agreed-upon value policies. They solely provide pure indemnification.
Insurable interest is defined quite clearly under the Marine Insurance Act. It stipulates that there must be a physical thing exposed to marine perils, and that the insured must have some legal relationship to the object, as a result of which he benefits from its preservation and is harmed by its loss or damage, or where he may be liable in relation to it.
In the case of fire and accident insurance, an insurable interest must exist at the time of the policy’s creation.
contract and at the time of loss, the interest in a marine contract must exist at the time of loss, even if it did not exist at the time the insurance was effected. This is crucial when considering the commercial practice, which allows for the sale and purchase of items while in transit. The MIA, on the other hand, has stipulated that where the goods are insured, “Unless he was aware of the loss at the time of obtaining insurance and the insurer was not, the assured may recover the loss, even if he did not acquire his interest until after the loss. If the assured has no interest at the time of the loss, he cannot acquire interest after learning of the loss through any act or election. As a result, a contingent as well as a defeasible interest is insurable. It is also possible to insure a partial stake.
A marine cargo policy is freely assignable either before or after loss, unless the assignee has acquired insurable interest, as is the case with standard indemnity policies in other classes of insurance.
The Insurable Interest is also determined by the type of sale contract. The most typical contract terms, known as clauses, have been given their own chapter “Terms of Inco”. The contract’s conditions specify which of the two parties is liable for insuring the products.
Every insurance contract is a contract “uberrimae fidei,” which means that both the insurer and the assured must behave in good faith. In Marine Insurance, it is the proposer’s responsibility to disclose all material details about the risk in a clear and correct manner. A material fact is one that would influence a sensible Underwriter’s decision on whether to enter into a contract at all, or whether to enter into it at one rate of premium or another, and on what terms. Aside from the responsibility of disclosure, the insured must act in good faith toward the insurer during the contract’s lifetime.
Non-disclosure, concealment, innocent misrepresentation, and fraudulent misrepresentation are the four categories used to characterize violations of the duty of utmost good faith. The first two are referred to as passive breaches, while the third and fourth are referred to as aggressive breaches. The Marine Insurance Act requires the assured to communicate to the insurer all material circumstances that he is aware of or should be aware of in the ordinary course of his business.
Although deliberate and material non-disclosure would normally amount to fraud and render the insurance worthless, the result is the same whether the non-disclosure is intentional or inadvertent, and the policy may be avoided.
Overvaluation, for example, must be disclosed to insurers; if it is not, it is considered a concealment of a material fact, and the insurance is voided.
“Proximate cause is defined as “an active, efficient cause that puts in motion a series of events that leads to a result without the intervention of any force that has been begun and is actively operating from a new and independent source.”
If an insured danger is the proximate cause of the loss, insurers are liable. The insurers are not liable if an insured risk is just a distant cause of the loss, with the proximate cause being an uninsured or excluded peril.
The proximate cause is not necessarily the one that is closest in time, but it is the one that is closest in efficiency. It is the primary, effective, and operational reason for the loss.
- a) If an insured risk is one of the factors contributing to the loss and no exempted peril is present, the loss is covered.
- b) If one of the causes is an excluded peril, the loss is not covered at all, unless the insured peril’s effects can be distinguished from the uninsured peril’s, in which case the former is covered but not the latter.
“Subrogation is the right of one person to act in the place of another and claim all of the other’s rights and remedies, whether or not they have been enforced.”
Subrogation is a corollary of the indemnity concept, hence the right of subrogation only applies to insurance, which are indemnity contracts. Subrogation is a question of equity, with the goal of ensuring that the insured is not over-insured for the same loss.
1i) He has the right to assume the assured’s interest in whatever remains of the subject-matter so paid for (abandonment);
1.ii) and, as of the time of the loss, he is subrogated to all of the assured’s rights and remedies (subrogation)
(b) When an insurer pays for a partial loss, he does not gain title to the subject-matter insured or to any part of it that may remain, but he does become subrogated to all of the assured’s rights and remedies as of the time of the loss and in the amount that the assured has been compensated.
Subrogation arises only after a loss has been paid in the case of marine insurance. In terms of rights and remedies, the insurer is only allowed to recover up to the amount he has paid.
The insurer has the right to assume ownership of the subject-matter insured upon payment of a total loss. The right is granted to him by abandonment (rather than by rights of subrogation), and it means that if the property is later salvaged or recovered, the insurer is entitled to keep the entire proceeds of sale, even if they exceed the amount paid out under the policy, as long as the property is fully insured and the assured was not bearing part of the risk himself.
The insurer is subrogated to the right to exercise ownership of the property in addition to this right “all assured’s rights and remedies” as of the time of the loss-causing casualty This simply means that if the loss was caused by the carelessness of a third party against whom the assured has a tort claim such as a carrier or bailee – the Insurer is entitled to any recovery (which reduces the loss) that the assured may obtain against such third party. This notion applies to both whole and partial losses and has nothing to do with the abandonment doctrine.
Multiple insurers may cover the same risk at the same time. In that circumstance, it is preferable to ensure not only that the insured receives no more than an indemnity, but also that any loss is equitably distributed among all of the insurers concerned. The principle of contribution is a means of equitably dividing the weight of claims among insurers for which everyone bears some obligation.
Before a loss is split among insurers, the following conditions must be met.
A marine insurance contract is an arrangement in which the insurer agrees to indemnify the insured in the way and to the extent agreed upon against transit losses and losses incurred during transit. A marine insurance policy may be extended to protect the insured against losses on inland waters or any land risk that may arise as a result of a sea voyage, either expressly or by usage of trade. In layman’s terms, maritime insurance entails
- A) Cargo insurance, which covers the loss or damage of commodities while they are being transported by train, road, sea, air, or post. As a result, cargo insurance is concerned with the following:
- B) Hull insurance, which deals with the protection of ships’ hulls (hull, machinery, etc.). This is a very technical topic that will not be covered in this module. Simply put, Hull Insurance is the element of maritime insurance that deals with the insurance of ships, barges, boats, and offshore facilities.
Any contract must include an offer and acceptance clause. Similarly, after the insurance firm accepts the offer, the commodities covered by marine (transit) insurance will be insured.
2) Premium payment: To ensure that the risk is covered, an owner must ensure that the premium is paid well in advance.
3)Contract of Indemnity: Marine insurance is a contract of indemnity, which means that the insurance provider is only responsible for the actual loss suffered.
4) Absolute good faith: When insuring things, the owner of the goods must provide the insurance provider with all essential information.
5) Insurable Interest: If the person has an insurable interest at the time of the loss, the marine insurance will be legitimate.
6) Contribution: If a person covers his products with two insurance firms, both insurance companies will pay the loss proportionately to the owner in the event of a marine loss.
7)Marine Insurance Period: The policy’s insurance period is for the amount of time it takes to complete a transit. In most cases, open maritime insurance will last no longer than a year.
8) Purposeful Act: If products are damaged or lost during transit as a result of an owner’s deliberate act, the damage or loss is not covered by the policy.
9) Claims: In order to receive compensation under marine insurance, the owner must notify the insurance company as soon as possible so that the insurance company can determine the loss.
MARINE INSURANCE OPERATIONS Marine insurance is extremely significant in both domestic and international trade. Most sales contracts provide that the items must be insured against loss or damage, either by the vendor or the buyer.
The seller is accountable for the items until they are loaded onto the steamer (F.O.B. contract). Following that, the buyer is accountable. He is free to get his insurance done wherever he wants.
Rail travel is free. The provisions are the same as in the preceding (F.O.R. Contract). Internal transactions are primarily affected by this.
Freight and Cost When the items are loaded into the ship, the buyer’s liability (C&F Contract) usually kicks in. From that point on, he must be responsible for the insurance.
Insurance, Cost & The seller is responsible for arranging insurance up to the (C.I.F. Contract) destination in this situation. In the sale invoice, he includes the premium charge as part of the cost of products.
In regular export/import trade, the exporter will ask the importer to open a letter of credit in the exporter’s favor with a bank.
The letter of credit specifies the insurance terms and conditions. The Institute Cargo Clauses (I.C.C.) are utilized for export/import policies. The Institute of London Underwriters (ILU) created these clauses, which are used by insurance companies in most countries, including India.
- a) Specific voyage policy: A specific journey policy addresses the transportation of commodities via inland transportation, as well as import and export to specific locations.
- b) Open policy/Open cover: An open policy or an open cover is a promise to cover all shipments/transits made during the year. At the outset, the insurer will only have general information about the cargoes, the expected total insured, the journeys, and the quality of the boats to be employed. For each shipment, specific information is provided in the sequence of dispatch or in the form of periodic declarations.
- c) Sales Turnover Policy (Annual) In India, an annual sales turnover policy has gained a lot of traction. This is similar to an open policy with the exception that the premium rate is based solely on sales turnover (and any other components not covered by the term “sales turnover”). In some companies, it’s also called as Sales Turnover Policy (STOP) or Annual Turnover Policy (ATP).
- d) “Obligation” Insurance According to the Customs Act, cargo imported into India is subject to Customs Duty. This obligation can be included in the value of the cargo insured under a Marine Cargo Policy, or it can be covered by a separate policy, in which case the Duty Insurance Clause is included.
- e) Buyer’s or Seller’s Contingency Insurance: This policy covers the assured’s contingent financial interest in any items where the assured has no obligation to insure under the Terms of Sale or where the coverage supplied is more restrictive than that provided under this policy.
ii)Normal leakage, normal weight or volume loss, or normal wear and tear These are typical ‘trade’ losses that are unavoidable and not by chance.
iii. Loss due to a “inherent vice” or the subject matter’s nature. Perishable goods such as fruits, vegetables, and other perishables, for example, may decay without any ‘accidental cause.’ This is referred to as “inherent vice.”
vi)Loss resulting from the vessel’s owners, operators, or other parties’ insolvency or financial default.
viii)SRCC (Strikes, riots, lock-outs, civil commotions, and terrorism) can be covered for an additional cost.
Hull insurance covers the vessel and its equipment. There are several types of vessels, such as ocean steamers, sailing vessels, builders, hazards fleet policies, and so on.
It covers the hull and machinery of ocean-going and other vessels such as barges, tankers, fishing boats, and sailing yachts.
The increase of insurance of offshore oil/gas exploration and production units, as well as related construction risks, is a recent development in hull insurance.
It is covered by specific classes of enterprise, including fishing vessels, trawlers, dredgers, inland vessels, and sailing vessels.
The vessel or ship is the subject of hull insurance. Ship designs come in a variety of shapes and sizes. The majority of them are made of steel and welded together, and they can travel on the sea in ballast with cargo.
The ship will be measured in GRT (Gross Register Tonnage) and NRT (Net Register Tonnage) (Net Register Tonnage). GRT is computed by dividing the volume of the ship’s hull below the tonnage dock, plus all compartments above the deck with permanent means of closure, by the volume of the ship’s hull in cubic feet.
NRT stands for gross tonnage minus certain spines for machinery, crew accommodations, and ballast spaces, and is meant to cover just those spinnings that are used for cargo carriage.
The capacity in tons of cargo required to load a ship to her load line level is referred to as DWT (Dead Weight Tonnage).
There are two types of tonnage: ocean going and coastal tonnage. The size of ocean-going general cargo vessels ranges from 5000 to 15000 GRT, while coasters are smaller and are used to transport bulk cargoes.
Container ships, large carriers (LASH Lighter Abroad Ship), and Ro-Ro (Roll on Roll off) vessels are examples of general cargo vessels (Refrigerated Vessels General Cargo)
Dry Bulk Carriers are specially built vessels that range in size from thousands of GRT for coasters to 70,000 GRT for ocean-going tonnage. Iron ore, coal, grain, bauxite, and phosphate are the most common bulk cargoes handled.
Tankers are built to transport large amounts of liquid. Tankers have been employing tanks that do not stretch the entire length of the tanker.
Cruise ships or passenger liners travel to far-flung locations with scenically lovely but rocky or shallow beaches, or near the cold waters of the Arctic and Antarctic. They are equipped with modem navigational systems.
There are also fishing vessels, offshore oil vessels, and other types of vessels.
The geographic/physical characteristics of the area of operations range from relatively sheltered inshore fishing areas to the full rigors of the open seas, including gales, strong seas, fog, ice, and snow.
Offshore oil vessels are used for demonstrations or commercial oil extraction from the ocean floor.
The coverage covers the hull, machinery and equipment, as well as supplies and other items on board, but not the cargo.
The insurance covers the individual ship owner’s requirements and protects him against partial and total loss, ship’s proportion of general average and salvage charges, legal and labor expenses, and ship-liability owner’s to other vessels resulting from collisions.
To ensure the risk, Hull underwriting requires the following information: Type, construction, builders, age, tonnage, dimension, equipment, propulsion machines, engine, fire extinguisher; classification society, merchant shipping act, warranties, navigation physical and moral hazard; classification society, merchant shipping act, warranties, navigation physical and moral hazard
What is the difference between proximate cause and actual cause?
“Cause in fact” is another term for the actual cause. The root of the problem is a simple one. It’s what caused the victim’s injuries or losses in the first place. In an accident involving a vehicle striking a pedestrian, for example, the driver’s actions constitute the true cause of the accident. The legal cause, on the other hand, may not be the actual cause. In a personal injury case, the individual responsible for the real cause may not be the liable party.
Why is proximate cause important in insurance?
Proximate Cause is an important insurance principle that aids in determining how a loss or damage occurs and whether it is caused by an insured danger or not. The most crucial thing to remember is that the proximate cause is the sole cause that is close by, not the remote cause. It primarily focuses on claim administration and, more specifically, diagnosing the peril’s role in a claim. Continue reading to learn more about the Proximate Cause in Fire Insurance Policies.
In the case of fire insurance, certain risks are clearly stated (insured perils), while others are excluded (known as exclusions), and some perils may be covered while others may not. It’s not always clear if the loss was caused by a single covered or uninsured hazard. In order to determine whether or not a claim should be paid. Different circumstances may occur as a result of the number of risks involved in the situation, some of which are covered and others which are not.
When an insured risk is followed by an uninsured peril, the situation becomes more complicated. Alternatively, an insured risk may occur concurrently with an uninsured peril or a mix-up. The proximal concept aids in the resolution of such situations, allowing the insurer to determine whether a claim is payable or not, and if so, to what extent.
Vital Points to Remember
- If you have a fire insurance policy, you must determine the proximate cause in order to determine whether or not a claim is covered by the insurer.
- According to the proximate clause, there should be a sequence of events that result in some outcome. It should work actively on a fresh and independent source without the use of coercion.
- It is the insurance policyholder’s responsibility to show that an insured hazard has resulted in losses or damages. If the insurer wants to deny the claim, they must show that the risk (which caused the damage) is covered by the exclusion list.
Case: 1
Mr. Rajiv Saran purchased a fire insurance coverage for his home’s furniture but did not get a policy to cover electronic equipment. After a fire broke out in his building, there were frequent electrical outages. His refrigerator eventually broke down as a result of this. In this situation, he expected to be able to file a claim under his fire insurance policy. However, he was upset when it did not occur.
Because the fire insurance policy did not cover “breakdown-related” dangers, the primary cause was determined to be “breakdown” rather than “fire.” Rajiv’s insurer became more selective in paying claims as he became more picky in his coverage.
Case: 2
Firefighters were able to save the intact stock from a burning building by removing it and protecting it from the flames. Because the goods were stacked in the open yard, rainwater destroyed them. Was the fire or the rain the direct source of the damage?
If the items were damaged by the rain before the policyholder had a chance to protect them. The proximate cause of the damage would then be fire, which would be covered by the fire insurance policy. However, if the stocks were kept exposed for an extended period of time, the rain would be considered a new and separate source of harm.
A nearby fire triggered a minor explosion at M.J.N Engineering’s location. Resulting in a new fire and a massive dynamite explosion, which damaged a portion of the items and apparatus. The proximate cause of the damage was determined to be a fire. M.J.N. had a fire insurance coverage, so they went to their insurance company. The insurer settled the claim even if a fire insurance policy provided normal exemptions from loss or damage from an explosion of any kind. Because the explosion was caused by an insured danger, it was covered by insurance. In the case of a fire, the insurance company was responsible for all losses and damages up to a set maximum.
Which of the following best describes proximate cause?
Which of the following statements most accurately illustrates proximal cause? Plaintiff’s injury must have been a foreseen outcome that the Defendant should have expected.