What term includes damage where the insured peril was the proximate cause of loss

Courts have long been split on which of two legal theories of recovery appropriately apply in cases when some causes of damage are covered under an insurance policy and others are excluded. Concurrent causation is the legal doctrine that applies when loss or damage occurs because of two or more causes, one that is covered, such as negligence on the part of a third party, and one that is excluded, such as flooding.

An example of concurrent causation is when earth movement causes damage to an insured structure, a cause of loss that is specifically excluded under the property causes of loss form. However, the insured claims that the cause of loss was actually a third party’s negligence in bulldozing a slope above the dwelling, arguably a non-excluded peril under an open perils policy. In jurisdictions that apply concurrent causation, coverage is found if the non-excluded peril played any part in the loss.

journal article

The Cambridge Law Journal

Vol. 40, No. 2 (Nov., 1981)

, pp. 284-306 (23 pages)

Published By: Cambridge University Press

https://www.jstor.org/stable/4506368

Journal Information

The Cambridge Law Journal publishes articles on all aspects of law. Special emphasis is placed on contemporary developments, but the journal's range includes jurisprudence and legal history. An important feature of the journal is the Case and Comment section, in which members of the Cambridge Law Faculty and other distinguished contributors analyse recent judicial decisions, new legislation and current law reform proposals. The articles and case notes are designed to have the widest appeal to those interested in the law - whether as practitioners, students, teachers, judges or administrators - and to provide an opportunity for them to keep abreast of new ideas and the progress of legal reform. Each issue also contains an extensive section of book reviews. Current issues of the journal are available at http://www.journals.cambridge.org/clj

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Proximate Cause is an important principle of insurance, which helps in deciding how the loss or damage happens and whether it is the result of an insured peril or not. The important point to consider here is that the proximate cause is the only nearest cause and not the remote cause. It mainly revolves around the claim administration and, more precisely, diagnosing the role of the peril in a claim. So, to understand the Proximate Cause in Fire Insurance Policy read further.

In the case of fire insurance, there are certain perils specifically mentioned (insured perils) whilst some perils are excluded (known as an exclusion) and some may be covered and some may not be. It does not always know whether a single insured or uninsured peril caused the loss. In order to find out whether a claim should be payable or not. Different situations might arise when the number of perils involved in the situation, some cover and some does not.

Read More: How to file a claim under Fire Insurance?

The situation becomes more complex when an uninsured peril follows an insured peril. Or insured peril follows an uninsured peril or mixes up simultaneously. The principle of proximate helps in solving such kind of situation and helps the insurer to decide whether a claim is payable or not, and if payable, then to what extent.

Vital Points to Remember –

• If you have a fire insurance policy, it is your responsibility to establish the proximate cause in order to decide whether a claim is covered by the insurer or not
• As per the proximate clause, there should be a series of events that brings about some results. Without any intervention of force and it should work actively on a new and independent source
• It becomes the duty of the insurance policyholder to demonstrate that an insured peril has caused some losses or damages. In case the insurer wants to reject the claim, they must prove that the peril (which caused damages) falls under the exclusion list

Case 1: Proximate Cause in Fire Insurance

Mr. Rajiv Saran bought a fire insurance policy for the furniture of his house but didn’t buy any policy covering electronic items. A fire erupted in his building, following which there were frequent electrical fluctuations. Due to this, his refrigerator broke down after a few days. In such a situation, he was expecting to get his claim through the fire insurance policy. However, it disappointed him when it did not happen.

As the fire insurance policy did not include ‘breakdown-related’ perils, the proximate cause was decided as ‘breakdown’ and not the ‘fire’ directly. As Rajiv got selective in coverage, his insurer also got selective in paying claims.

Read more: Which Assets are Not Covered by The Fire Insurance Policies?

Case: 2

Luckily, firemen were able to remove the undamaged stock from a burning building and protect it from the fire. Rainwater subsequently damaged the goods because of stacking in the open yard. Here the proximate cause of the damage was the fire or the rain?

If the rain damaged the goods before the policyholder had an opportunity to protect them. Then here the proximate cause of the damage would be fire, covered under the fire insurance policy. However, if left the stocks uncovered for a long period, would consider the rain as a new and independent cause of damage.

Case: 3

A fire on a distant premise caused a slight explosion at M.J.N Engineering’s premises. Causing another fire and a terrible explosion of dynamite, damaging a certain portion of goods and machinery. Holding it that the proximate clause of the damage was a fire. M.J.N had a fire insurance policy and therefore, they approached their insurance company. Holding it that even if a fire insurance policy had usual exemptions from loss or damage from the explosion of some kind, the insurer settled the claim. As the explosion was an incident that occurred due to an insured peril. I.e., fire, the insurance company was liable to compensate for all the losses and damages up to a certain limit.

What term includes damage where the insured peril was the?

How is the proximate cause of a loss defined?

Which of the following does the term proximate?

What is proximate insurance?