Proximate Cause

Quick Summary of Proximate Cause

The cause of a loss, which sets off a chain of events resulting in the damage to the insured person or property.

Proximate cause refers to a direct source of loss that would not have occurred if the loss had not occurred; as a result, it is a highly relevant principle in the insurance sector. To be deemed a proximate cause, an act or event does not have to directly precede a loss or start a chain of events leading to the same. Establishing a proximate cause is critical in evaluating whether coverage applies or if the negligent person can be held liable.

In the case of property insurance, determining a proximate cause may be critical in determining coverage when more than one risk contributes to a loss. Because a policy may exclude specific risks, if the one judged to be the proximate cause is not covered by the policy, the insurer is not required to pay benefits, and vice versa.

In terms of liability insurance, if one party’s negligent behaviour is claimed to be the proximate cause of injury to another, it serves as a legal basis to hold the former accountable. Liability insurance would assist in covering the costs of defence as well as any damages awarded to the plaintiff.

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