What is the Doctrine of Proximate Cause?

The Doctrine of Proximate Cause is a rule used in insurance. It helps to decide if the insurance company should pay for a loss. To understand this rule, you need to know two main things:

1. Peril Insured Against: This is the specific risk or danger that the insurance policy covers.
2. Proximate Cause: This means the main reason something happened. It is the closest, most direct cause of the loss.

How Does It Work?

1. Identifying the Cause: When there is a loss, you need to find out what caused it. The insurance company will only pay if the loss was caused directly by the peril insured against. If the loss was caused by something else, the insurance will not pay.
2. Example: Let’s say you have insurance for fire damage. If your house burns down because of a fire, the insurance will cover it. But if the house burns down because of an earthquake, and your policy doesn’t cover earthquakes, the insurance will not pay. Even if the fire happened after the earthquake, the fire would not have occurred without the earthquake. So, the earthquake is the proximate cause.

Why Is It Important?

The doctrine is important because it makes sure that insurance companies only pay for the losses they agreed to cover. It also prevents them from having to pay for losses caused by unrelated events.

Maxim to Remember: The key saying here is “causa proxima non remota spectatur.” This is Latin for “the nearest cause, not the remote one, is considered.” This means that when figuring out what caused the loss, you look at the most direct cause, not something that happened earlier or far away in the chain of events.

When is the Doctrine Used?

The doctrine is used when there are multiple events leading to a loss. You have to decide which event is the main cause (proximate cause) of the loss. This can be tricky when many things happen one after another.

Application in Two Situations:

1. Loss Caused by Peril Insured Against: If the loss is caused directly by the peril covered by the insurance, the insurance company pays for the loss.
2. Peril Caused by an Excepted Cause: If the peril insured against happens because of something that the policy does not cover (an excepted cause), the insurance will not pay. For example, if your policy covers fire but not earthquakes, and an earthquake causes a fire, the insurance does not pay.

Summary

• Proximate Cause: The main, direct reason for a loss.
• Peril Insured Against: The risk covered by the insurance.
• Rule: Insurance pays only if the loss is directly caused by the peril insured against.
• Key Saying: “Look at the nearest cause, not the distant one.”

By using the Doctrine of Proximate Cause, insurance companies ensure they only cover losses as agreed, making it fair and clear for both the insurer and the insured.