What is Proximate Cause in Insurance? Understanding Its Role in Loss and Liability
If you have an insurance policy or thinking about getting one, you must understand the term, ‘proximate cause’. If you’re unfamiliar with the term or how it relates to your insurance policy, that’s where we come in. Let’s dig into what ‘proximate cause’ means in insurance, its role in loss and liability, and what that means for you.
What is Proximate Cause in Insurance and Why is it Important?
According to the Cambridge Dictionary, the term proximate cause is something that is considered to be the direct cause of damage, loss, or injury.
Examples of proximate causes are:
- Fire
- Flood
- Lighting
- Earthquake
Knowing the proximate cause of your loss is important for several reasons:
Firstly, without knowing the proximate cause, your insurer cannot know if your claim is valid or not. Therefore, the proximate cause determines whether or not you’ll be compensated for your damage loss or injury or in the case of a motor accident, it determines who is the liable party.
For example, if your property sustained damages primarily from a covered peril, chances are your claim will be granted. On the other hand, if your property was damaged primarily because of an uncovered peril, you may not be granted your claim.
In addition, knowing the proximate cause can help you avoid lengthy disputes and help you get the compensation you deserve.
What is the Difference Between Proximate and Remote Causes
Remote causes are anything that indirectly causes damage, loss, or injury. A remote cause usually happens before the event that caused damage, loss or injury. Meanwhile, proximate causes refer to events that are the primary reason for the damage, loss, or injury.
For example, let’s say you left your window or door open during a hurricane. Rain and wind enter the house and damage some of your furniture. Even though the open window and door contributed to the damage, they will likely be considered remote causes. The proximate cause in this scenario is the hurricane.
Your insurer is unlikely to account for the remote causes and will focus on the proximate ones when assessing your claim.
Common Scenarios and Real-Life Examples of How Proximate Cause is Applied to Insurance
Let’s say there is a house fire caused by lightning that destroys your house and furniture. If fire is a covered peril and lightning is not an excluded peril, chances are you’ll get compensated for the damage or loss caused by this fire.
On the other hand, let’s say your insurance policy excludes damage caused by lightning, floods, or earthquakes, but one of them caused the fire. In that case, it’s unlikely that you would be compensated for the damage or loss as a result since the proximate cause would have been an excluded peril.
In the case of property insurance, we recommend getting all commercial risks covered and comprehensive motor insurance since these would also offer you more protection. However, regardless of your policy, you should check your insurance policy to be clear on what is covered and what isn’t. If you’re unsure or have any questions, contact your insurance provider.
In case of a motor vehicle accident, let us say one person’s vehicle was rear ended by another and pushed into a third vehicle. The person who caused the initial collision is the proximate cause, and this motorist’s insurer is, therefore, responsible for paying for the damage to all the parties involved. The important point is that there was no break in the chain of events which resulted in the accident and that the individual had motor insurance in place.
Frequently Asked Questions:
1. How do you determine the proximate cause?
There are many ways you or your insurer can determine the proximate cause.
For example, your insurer may do a site inspection to try and find the proximate cause of the damages. It’s not uncommon for them to involve other specialists such as loss adjusters, investigators, engineers, plumbers, or electricians to help them determine the primary causes of the damage.
Your insurer will also assess any video, photograph, or reports. That’s the main reason we recommend our policyholders take clear videos and photographs. It comes in handy when filing a claim.
Photos, videos, or reports can help your insurer determine the proximate cause and it may result in you getting compensated for the damage, injury, or loss you suffered.
2. What happens if there is more than one likely proximate cause for the loss, and one of those causes is excepted from cover?
This can be a tricky situation. It’s not uncommon to have several proximate causes or concurrent causes for loss or damage.
In these cases, your insurer will assess the various causes and their relationship to the damages. By doing that, they hope to figure out which one of the causes was most dominant in causing damage and loss.
For example, let’s say you have hurricane coverage but no flood coverage. If a hurricane blows off the roof of your property and rain floods your home, you could still get compensated. In this case, it’s difficult to distinguish the damage and therefore, compensation would be considered given that the proximate cause was a hurricane.
Proximate cause is the direct cause of damage, loss, or injury. Insurers focus on the proximate cause to determine whether or not they’ll approve your claim. A claim will likely be approved if the insurance policy covers the proximate cause of the damage, loss, or injury. On the other hand, if the proximate cause of your damage, loss, or injury is not a covered peril, you won’t get compensated. The proximate cause can be determined by inspections, engaging with specialists, and reviewing evidence.
If you’re ready to insure your car or property and minimize out-of-pocket expenses, GenAc is here to serve you. Contact us to get started.