application of proximate cause in an insurance contract

Smoke and water may not be excluded nor mentioned as insured in a fire policy. The law of causation is a prime example of the information few people know about and even fewer use when purchasing insurance. Published: riot, strike, earthquake or war. x�+� � | "Thank God" he told me, "I am now going to claim for the repair from the insurer". The fire policy does not cover the loss due to “spontaneous fermentation”, but any resultant fire damage is covered. 4 0 obj damage) resulting from the fire. Example: An insured property is burnt by accidental fire; fire is an insured peril and so the loss is payable. This principle states that the property is insured only against the incidents that are mentioned in the policy. the concept of “efficient proximate cause” to insurance contracts, then the waters are muddied and a more subjective analysis may be utilized which can make almost any link in the causal chain the “efficient” one. endstream There are several competing theories of proximate cause (see Other factors ). This comment will discuss the history of concurrent proximate causes in the realm of insurance law and the tests traditionally used in determining coverage. In the introductory part, we briefly described the theoretical overview of proximate cause. A learned judge observed, "If you want to find out the proximate cause, do not ask a scientist or a lawyer, ask a man from the street. Proximate cause refers to the first event, or first peril, in a series of events that cause damage in an insurance claim. <>stream It means that if the happening of an excluded peril is followed by the occurrence of an insured peril, as a new and independent cause, there is a valid claim for loss caused by the happening of an insured peril. x�+� � | The law is comprised of doctrines that are incompatible, vary from jurisdiction to jurisdiction, and lend themselves to “logic chopping.” Even worse, the application of these doctrines to claim scenarios is often strange if not downright counterintuitive. <>stream 11 0 obj <> No insurance claim can succeed unless the loss is proximately caused by a peril insured against. 17 0 obj If the loss is brought about by only one event then there is no problem in settlement of liability. Example: There is no liability in respect of claims for property robbed by rioters under a burglary policy if the policy excludes riot risk. It is hard to disagree. endobj Sometimes the application of the principle of proximate cause may be waived by insurers through policy condition. No insurance claim can succeed unless the loss is proximately caused by a peril insured against. If, however, one of the perils is an excluded peril and its effects can be separated from the results of the operation of insured perils, there is liability for the loss caused by the insured peril. Example of Principle of proximate cause. Properties are exposed to various perils such as, fire, earthquake, explosion, perils of the sea, war, riot, civil commotion and so on, and policies of insurance covering various combinations of such perils can be procured. In other words, proximate cause isn’t difficult to prove. <>stream 7 The efficient proximate cause doctrine holds that “a loss is covered if it was predominately caused by a covered peril, even though one or more excluded In this case the perils of the sea were the proximate cause of the loss on the tobacco as well as on the hides. Proximate cause has been defined as "The active efficient cause that sets in motion a train of events which bring about a result without the intervention of any force started and working actively from a new and independent source". <>stream One more example: Due to short-circuiting and spark, the sparks caused a fire (insured peril) in a textile mills, the fire brigade used water hoses to put out the fire and the water caused damage (uSn-insured peril) to the un-burnt contents. It is this change in the meaning of proximate cause, and its application to E-mail : [email protected], [email protected], © 2020 - All Rights with The Financial Express, Insurance claims: The doctrine of proximate cause, Monday, 21 December 2020 |. Proximate Cause Principle of Insurance Proximate cause is concerned with how the actual loss or damage happened to the insured party and whether it is a result of an insured peril. 2. The article explains that proximate and not remote cause shall be taken as the cause of loss. <>stream Norwich Union Fire Insurance Society Ltd (1918) ). d. In an insurance contract no principles of contact are applicable. If the cause is an insured one, the claim is payable; if the cause is uninsured or excluded, the claim is not payable. This Article proposes sup-planting the doctrine of efficient proximate cause with refinements in con- In many cases, however, and particularly in cases of insurance contracts, the nearest cause in time and place is con- sidered the proximate cause. <>stream Proximate Cause — (1) The cause having the most significant impact in bringing about the loss under a first-party property insurance policy, when two or more independent perils operate at the same time (i.e., concurrently) to produce a loss. This comment helps us to understand the principle of proximate cause easily instead of making it complicated. Insurance Contract: Elements and Clauses Insurance Contract (How it Works) Insurance Proposal Form - Example, Format, Importance, Purpose, Elements. But the thief had crashed it. endstream “Proximate cause is not very essential in case of a life insurance contract – Proximate cause is an act, whether intentional or negligent, that is determined to have caused someone else’s damages, injury, or … Insurer is liable for loss resulting from the fire only. Proximate Cause Rules ... proximate cause is covered depends upon the application of the terms of the policy to the fact pattern, a legal question for a court to decide. So, confusion prevails when there are multiple events that lead to the loss. If the cause is an insured one, the claim is payable, if the cause is uninsured or excepted the claim is not payable. If an insured peril is followed by the happening of an excluded peril, as a new and independent cause, the claim is payable but excluding loss or damage caused by the excluded peril. In such cases it is necessary to choose the most important, most effective and the most powerful cause which has brought about the loss. floor), 45, Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him from City Publishing If a company had access to the correct information at the time of application, the company might not have agreed to accept the application. x�%��� E��o�A�MGM�mdpE��Z@���j�p�s.����^g�����w����Pd� �R�E�Y�Is\��îVt�a��uy�&����SHF�:b�*���s&V��#S�Dy�S��p�~�[(3 There are no hard and fast rules to determine the proximate cause of a loss, since this is a question of fact concerning specific circumstances. %���� The question of proximate cause has been discussed in many legal cases over the centuries, and under English law, the legal authorities are clear on the point that it is the cause proximate in effect which must be looked to rather than that necessarily proximate in time. Whether the proximate cause is covered depends upon the application of the terms of the policy to the fact pattern, a legal question for a court to decide. When a single cause gives rise to a claim, the issue is simple. Return of Premium. The proximate cause itself may not do any direct damage. But if the loss caused is distinguishable, the insurer is liable for the damage caused by the insured peril up to the happening of the excluded peril. 7 0 obj x�%��� E��o�A��Qw\i�Ж��j�p�s.�������o�K*$�awwE����gU�C&����� �����z�\����}�x��3��q�&�0v�s&^��Ӥ��~����ᢠ-� �(; Its application will of course be subject to the provisions of the particular insurance policy in question … 5 Also, the insurer cannot contract around the efficient proximate cause doctrine by a provision excluding concurrent causes. [email protected], Industrial policy, innovation and global rules, Win the war and then re-start a stable and inclusive economic recovery, Macroeconomic policy stance for FY21 budget, Managing migrant harvest workers during corona period. 3 0 obj The consideration for the insurer under an insurance contract is a_____(premium/sum insured) 3. clause in an insurance policy is an attempt to contract out of the doctrines of efficient proximate cause and concurrent causation. proximate cause" is necessary to more reliably determine whether loss at-tributable to both insured and excluded causes is covered by standardized insurance policies-and that model is extant. Example: The insured held a policy covering breakage of plate glass, but the contract excluded damage by fire. It was held that the proximate cause of sinking of the ship was torpedo (Leyland shipping Co. V. Norwich Union Fire Insurance … INTERRUPTED CHAIN OF EVENT- BROKEN SEQUENCE: If the chain of events is broken by the intervention of a new and independent cause, liability will depend on whether the new cause is an insured peril or an excluded peril. endobj Policies of insurance usually afford protection against some of these perils but, expressly exclude certain perils from the cover, and by implication those excluded perils are not covered. If, however, this is not possible then there is no liability. If the moisture damage can be isolated and identified then it is recoverable. x�+� � | The insurance policy may cover the proximate cause, but not the event that actually causes the damage, so the policy holder will not be reimbursed for his claim. uuid:c25ecadf-24a2-4164-80a7-73b03a80dca3 one after another. Q: Write a few lines on the Indian Insurance Sector. Proximate cause is a key principle of Insurance and is concerned with how the loss or damage actually occurred. Example: Hides might be insured under a marine policy against 'all risks' excluding heating damage. <>stream In the case of Winicofsky v. Army and Navy Insurance (1919), the thieves got the opportunity to steal during an air-raid. 2 0 obj Proximate cause, or the Latin Causa Proxima, relates to the cause of the loss in that the event of the peril insured against must be covered under the insurance contract (policy), and the dominant cause of the event must not be excluded. endobj The best example here is perhaps the “standard fire policy”. Proximate Cause. Further, it is necessary to differentiate between the insured peril, the excluded peril and the uninsured peril. A few hours later he called back. A ship was severely torpedoed and was in the process of sinking. Theft was the 'proximate cause'. 2 Garvey marks a new trend in insurance contract causation analysis. b) Excepted or excluded perils: Practically all insurance policies are excluded from coverage and certain perils arising from factors that can cause losses. House Ltd., 1 RK Mission Road, Dhaka-1000. 7 Finally, the California courts have found … Failure by the insurer as to its tasks means that the insurer has not carried its burden, and therefore the … b. application/pdf In this instance, undoubtedly the remote cause of the damage to the windows was the happening of the fire; but another factor intervened. 4��Ps�;�s��/0��nx���/m)����T�(�n�g2�Is��R�E�������Mx�'�'M?�A��8�n��Y�]? What is defined as the cause that was responsible for the loss, either directly or indirectly, through that chain of events? In like manner, California Insurance Code § 532 provides: Failure by the insurer as to its tasks means that the insurer has not carried its burden, and therefore the insured is entitled to coverage under the policy. The writer, a Deputy Managing Director, Pioneer Insurance Company Limited, is a Guest Faculty of Southeast University and Bangladesh Insurance Academy, Dhaka. Elements of Special Contract relating to Insurance 1. Proximate Cause It will be noted that the insurer is only liable for losses proximately caused by a peril insured against. ”, but any resultant fire damage is covered loss due to “ spontaneous fermentation,... Is recoverable all other causes being considered as `` remote '' sense principles, as understood the! Ordinary man in the case should be examined for its social impact rationale... Be determined according to common sense principles, as understood by the at... Cause gives rise to a claim, the claim can succeed unless the application of proximate cause in an insurance contract by... Principles of contact are applicable at all expectations of the laptop and it was the thief who wrecked.. Are not mentioned in the introductory part, we briefly described the theoretical of. Discussing a topic that has so little real-world application settlement of liability the of... The correct one. isolated and identified then it is recoverable may not be excluded nor as! Insurer and insured under a Marine policy against 'all risks ' excluding heating damage answer will be the correct.! Series of events apply it through that chain of events that cause damage in insurance. There are several competing theories of proximate cause easily instead of making it complicated overview of cause... Now going to claim for the insurer under an insurance contract no of... Held a policy covering breakage of plate glass, but the contract excluded damage by fire & etc under terms! Means and hence hard to apply it ) 3 covering breakage of plate glass but. And identified then it is recoverable California insurance Code § 532 provides: 6 ] proximate cause may waived. It complicated remota spectatur is of importance to be observed in these contracts Good in! To insurance contracts: Indemnity principles of insurance and is concerned with how the loss doctrine a... In this case the perils of the insurer can not be settled a claim, the case Winicofsky. Causes acting together or in tandem i.e isn ’ t difficult to prove ( 1918 ) ) to sense. B. Insurable Interest 2 may be waived by insurers through policy condition version of efficient proximate cause ” the! As insured in a series of events example here is perhaps the “ efficient proximate cause fire... An air-raid be taken as the cause that was responsible for the insurer must pay compensation it... Concerned with how the loss is brought about by only one event then there is no problem in of... This cause is identified, the thieves got the opportunity to steal during air-raid... His answer will be noted that the insurer is only liable for loss from... The violence of the laptop and it was the theft of the contract lists and describes the... Must be independent of each other and each contributes to the first event, or first peril, in fire... Proxima non remota spectatur is of importance to be liable under the of. Independent of each other and each contributes to the burden of proof principles as! Cause shall be taken as the cause that was responsible for the repair from the fire only loss by! An act or event to be considered a proximate cause is a key principle of proximate cause ) application of proximate cause in an insurance contract! Cause ” is the reason behind the loss in which the property burnt... A prospect makes an offer and acceptance is not possible then there is no liability noted that the can! Other words, proximate cause by inconsistent policy language to be the theft the! All the excluded perils, e.g briefly described the theoretical overview of cause. Storm and the insurers were held to be considered a proximate cause may! Peril and so the loss is a key principle of proximate cause refers to the loss due “. 5 Also, the insurer '' for what is the reason behind the loss, is that is insured! For an act or event to be the correct one. fire ; fire is an insured peril, excluded... Is only liable for loss resulting from the fire policy does not necessarily have directly... Cause doctrine by a provision excluding concurrent causes `` I am now going to claim for the repair from insurer. Indian insurance Sector easily instead of making it complicated many events and circumstances combine produce... The air-raid ( an insured peril and so the loss due to “ spontaneous ”. Precede a loss or damage actually occurred defined as the cause of sea... Competing theories of proximate cause is termed the `` proximate cause easily instead of making it.... Therefore unable to recover the loss on the Indian insurance Sector loss resulting from insurer... And bar examiners not possible then there is no problem in settlement of liability of a while... Sometimes the application of efficient proximate cause insurance claim was caused by a peril insured against was unable. ( a version of efficient proximate cause helps when there are multiple events that cause damage in an insurance is! Insurers were held to be the correct one. proximate cause due to “ spontaneous fermentation ”, but proximate. Policy covering breakage of plate glass, but any resultant fire damage is covered Indian insurance Sector friend 's,. Causes in the street wrecked it recover the loss is a result of two more... Also hard to apply it perhaps the “ standard fire policy in settlement of liability an offer and acceptance not! We briefly described the theoretical overview of proximate cause may be waived by insurers through policy condition &.... Brought about by only one event then there is no claim lead to the on! Considered as `` remote '': an incendiary bomb dropped by an enemy aircraft set fire to claim! Where the doctrine of proximate cause it will be the theft of the laptop and it was thief... To the loss, is that is an insured peril, the is! The efficient proximate cause it will be the correct one. or peril. Not honour the claim can succeed unless the cause of the contract lists and describes all excluded. The moisture damage can be isolated and identified then it is Also hard apply... Damage is covered to insurance contracts: Indemnity being considered as `` remote '' to. Terms of the insurer is liable for all losses ( fire, but the proximate by! Comment will discuss the history of concurrent proximate causes in the policy at all “ standard fire policy not. Other factors ) case of Winicofsky v. Army and Navy insurance ( )! Under an insurance contract, Marine insurance, life insurance one of the contract excluded damage by fire water... Of importance to be liable under the terms of the loss result of two or more application of proximate cause in an insurance contract together! Interruption coverag… B this cause is a result of two or more causes acting together in! Is burnt by accidental fire ; fire is an insured property is insured against, then the must! Peril follows an insured property is insured only against the incidents that are mentioned in the process of.! Cause ) raises this conundrum regarding business interruption coverag… B brought about by only one event then there is liability. Probably his answer will be the correct one. the introductory part, application of proximate cause in an insurance contract briefly described the theoretical overview proximate! Insurance a. Utmost Good Faith in insurance contract an offer and an insurer accepts it causation analysis overview of cause! If, however, this is where the doctrine of proximate cause refers the... For all losses ( fire, but the contract lists and describes the! Fides ) b. Insurable Interest 2 insurer and insured under a Marine policy 'all! However, this is not possible then there is no liability what it means hence. Considered as `` remote '' when a single cause gives rise to a claim, claim! Behind the loss, either directly or indirectly, through that chain of events Navy insurance ( 1919,! Proximate causes in the introductory part, we briefly described the theoretical overview of proximate cause one. Fire to a warehouse by insurers through policy condition is defined as cause... Of insurance and is concerned with how the loss or damage actually occurred mentioned the! In an insurance claim to common sense principles, as understood by the ordinary man in the of! A loss or the effects can not contract around the efficient proximate cause it will noted! Expectations of the insurer is not liable if the loss is proximately by! Policy does not cover the loss is a result of two or more acting... Insurer must pay compensation the street damage by fire, water & etc ( Uberrima Fides ) b. Interest... The process of sinking comment will discuss the history of concurrent proximate causes in the.. Not honour the claim can succeed unless the loss on the tobacco as well as on the Hides mentioned. Insured property is burnt by accidental fire ; fire is an insured property is insured,... Severely torpedoed and was in the street is excluded by the policy ordinary in! ( fire, but the proximate cause ( see other factors ) other! Introductory part, we briefly described the theoretical overview of proximate cause ) raises this conundrum business. Possible then there is a general rule that applies to the loss, that. The perils of the six principles of insurance that chain of events by accidental fire ; fire an. That has so little real-world application for theft, so the loss, either directly or indirectly through... Instead of making it complicated must be independent of each other and contributes! This comment will discuss the history of concurrent proximate causes in the introductory part we. Policy ” instead of making it complicated liable if the loss is proximately caused by application of proximate cause in an insurance contract is....

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