A Project on

Proximate Cause in Insurance, Marine Insurance, Life Insurance

“Insurance law”
BBALLB (VIIth SEMESTER)
(School of Law)

Submitted To: Submitted By:

Ms. Prena arora ANANAY CHOPRA
(16LLB008)
(Assistant Professor)

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 INTRODUCTION

 The principle of proximate cause virtually revolves around the claims administration
and, more precisely, diagnosing the playability or otherwise of a claim on the question of
perils covered by a policy.
 A policy may cover certain perils mentioned specifically therein (known as insured
perils), whilst some perils may be specifically excluded (known as excepted perils) and
some may still be neither included nor excluded (known as uninsured perils).
 It is not always that much straightforward that a loss would be caused by a singular
insured or uninsured or an excepted peril so that a claim would clearly be either payable
or not payable.
 The principle of proximate cause has been established to solve such a cumbersome
situation and to enable a claims manager to decide whether a claim is at all payable or not
and if payable, then to what extent.
 Proximate cause means the active, efficient cause that sets in motion a train of events
which brings about a result, without the intervention of any force started and working
actively from a new and independent source.
 It is the immediate cause and not the remote cause. The maxim is, ’’Causa Proxima
nonremota spectatur”. Immediate or proximate means Proximate in efficiency and not
necessarily in time.
 Difficult situations do occur where numbers of perils get involved simultaneously, some
insured, some uninsured and some still accepted.
 More so, the position gets further complicated when an insured peril is followed up by an
excepted peril or an excepted peril is followed up by an insured peril, simultaneously
getting mixed up by uninsured perils.

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 Rule of Proximate Cause

With regard to pay-ability or otherwise of a claim, keeping in view the perils insured, uninsured
and excepted, certain rules of proximate cause should be noted carefully.

These are;

1. Single Cause: When a single cause gives rise to a claim the issue is simple. If the cause is an
insured one the claim is payable if the cause is uninsured or excepted the claim is not payable.

2. Concurrent Causes: It really becomes a difficult proposition when a loss is caused by the
operation of a number of perils, some insured, some uninsured and some excepted. If no
excepted peril is involved, then provided that there is at least one insured peril involved, the
claim becomes payable by disregarding others. However, if excepted peril is involved with
insured peril then if the effects of excepted peril can be separated from that of the insured peril
then there is a liability for the loss caused by the insured peril. If it cannot be so separated then
there is no liability whatsoever.

3. Unbroken Sequence: If excepted peril is followed by an insured peril, there is no claim. If on

the other hand an insured peril is followed by an excepted peril there is a claim for the loss
caused by the insured peril. When several events occur in an unbroken sequence than provided
there is no excepted peril involved, the whole claim is payable only if an insured peril is
involved.

4. Broken Sequence: If excepted peril is followed by an insured peril as a new and independent
cause then there is a liability for the loss caused by the insured peril. If on the other hand, an
insured peril is followed by an excepted peril as a new and independent cause, here also there is
a liability for the loss caused by the insured peril.

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 Proximate Cause in Marine Insurance

According to Section 55 (i) Marine Insurance Act,”Subject to the provisions of the Act and
unless the policy otherwise provides the insurer is liable for any loss proximately caused by a
peril insured against, but subject to as aforesaid he is not liable for any loss which is not
proximately caused by a peril insured against.”

Section 55 (2) enumerates the losses which are not payable are

(i) Misconduct of the assured,

(ii) Delay although the delay is caused by a peril insured against,

(iii) ordinary wear and tear, ordinary leakage and breakage inherent vice or nature of the subject
matter insured, or any loss proximately caused by rates or vermin or any injury to machinery not
proximately caused by maritime perils.

1. The insurer is not liable for any loss attributable to the willful misconduct of the assured, but,
unless the policy otherwise provides, he is liable for any loss proximately caused by a peril
insured against.

2. The insurer will not be liable for any loss caused by delay unless otherwise provided.

3. The insurer is not liable for ordinary wear and tear ordinary leakage and breakage, inherent vice
or nature of subject-matter insured, or for any loss proximately caused by rats or vermin, or for
any injury to machinery not proximately caused by maritime perils.

Dover says; “The causa proxima of a loss is the cause of the loss, proximate to the loss, not
necessarily in time, but inefficiency. While remote causes may be disregarded in determining the
cause of a loss, the doctrine must be interpreted with good sense.”

So as to uphold and not defeat the intention of the parties to the contract. Thus the proximate
cause is the actual cause of the loss.

There must be the direct and non-intervening cause. The insurer will be liable for any loss
proximately caused by a peril insured against.

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 Proximate Cause in life insurance

The efficient or effective, cause which causes the loss is called proximate cause, it is the real
actual cause of loss.

If the cause of loss (peril) is insured, the insurer will pay, otherwise, the insurer will not
compensate.

In life insurance,

The doctrine of Causa Proximo (Proximate Cause) is not applied because the insurer is bound to
pay the amount of insurance whatever may be the reason of death. It may be natural or unnatural.

So, this principle is not of much practical importance in connection with life assurance, but in the
following cases, the proximate cause’s observed in the life insurance, too.

War-risk

Where policy is issued on the exclusion of War and aviation risks, the proximate cause of death
is important because the insurer waives its liability’ if death occurred, in this case, while the
insured was in the field or is engaged in the operation of war and aviation.

Only premium paid or surrender value whichever is higher is payable and the total policy amount
is not payable.

Life Insurance and Suicide

If a suicide occurs within one year of the policy, or there was an intention to commit suicide arid
the payment of policy would be restricted, only up to the interest of the third party in the policy
provided the interest was expressed at least one month before the suicide.

Accident Benefit: A problem arises when an insured under an accident policy is killed or suffers
an injury, which has an immediate cause and a remote cause.

In accident benefit policy, double of the policy amount is paid. Therefore, the cause of death in
this policy is of paramount important.

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 WAIVER OF THE DOCTRINE

Sometimes the application of the rule of proximate cause may be waived by insurers through
policy condition. The best example here is probably the standard fire policy. The policy does not
cover loss due to “spontaneous fermentation”, but any resultant fire damage is covered.

This is because the insurers have used the word “it’s own” before “spontaneous fermentation”
which means that only the property subjected to spontaneous fermentation is excluded but any
resultant fire damage is covered.

Had the words “its own” not been there the resultant fire damage would not have been covered
under the rule of proximate cause.

By using these two words, the insurers have intentionally waived the application of the rule of
proximate cause.

SOME IMPORTANT LEGAL JUDGMENTS HAVING BEARING ON THE PRACTICAL

APPLICATION OF THE DOCTRINE

 GASKARTH V. LAW UNION (1876)

The insurer, Law Union, issued a fire policy to an insured covering fire, but not storm or cyclone
etc. There was a fire in the insured premises as a result of which the walls lost strength, but
nevertheless were standing. Some days later there occurred a furious storm which caused the
walls to fall. The insured lodged a claim for fire.

The insurer repudiated the claim on the ground that the loss was proximately caused by the storm
and not fire. The dispute went up to court. It was held that the proximate cause of loss was the
storm and, therefore the insurer was entitled to repudiate the claim.

 ROGERS V. WHITTAKER (1917)

An ordinary fire policy was given to cover a warehouse and the policy excluded war or warlike
operations etc. The warehouse was completely damaged by fire arising out of a bomb being
dropped from an enemy aircraft.

The insurer repudiated the liability on the ground that even though the warehouse was damaged
by fire, the proximate cause of the damage was a warlike operation (i.e., enemy action) and the
fire was simply a remote cause. The judgment was given in favor of the insurer maintains that
the loss was proximately caused by an enemy action which was not covered by the policy.

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 COXE V. EMPLOYERS LIABILITY ASSU. (1916)

This case is important particularly because it relates to a situation wherein the applicability of
proximate cause was modified by special policy wordings. It was a personal accident policy
covering accidental death but not caused directly or indirectly by or traceable to war. The fact
was that the insured was knocked down by a running train, in course of his duty as a military
officer, whilst guarding a railway line.

It was held that even though the proximate cause of his death was an accident, the claim under
the policy was not recoverable simply because the cause of the death could be remotely traced to
war which was excluded from the ambit of the policy coverage. Had the wordings of the policy
not been like that, the claim would have been clearly payable under the policy.

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 Proximate Cause Examples

 A man goes to a late night cinema and whilst returning home from the show he is
attacked by a group of vandals, stabbed and killed. The proximate cause of his death is
stabbing and certainly not going to the cinema, although it may be wrongly argued that
has he not had gone to cinema he would not have met the vandals and got killed in this
way. Here, going to cinema may be simply a remote cause without proximately causing
his death.

 Another example, a man riding a horse in a lonely hilly place falls from the horseback,
gets an injury and remains unconscious the whole night under exposure to severe cold.
The following morning he is discovered by some persons. In the meantime, due to the
severe exposure, the contracts pneumonia and dies. Here the proximate cause of his death
is accident or falling from the horseback, the reason being that injury leading to
unconsciousness, exposure to severe cold and then pneumonia are all natural events
developing gradually one after another without really being intervened by a new or
independent source (The example is based on a judgment given in ETHERINGTON V.
LANCASHIRE AND YORKSHIRE ACCIDENT INSURANCE Co., 1909).

 For finding out the proximate cause we shall have to watch closely the chain of events,
leading ultimately to a result, and out of such events whether in broken or unbroken
sequence, interrupted or uninterrupted, the cause proximate to the result must be
established. So long the first cause retains its identity and efficiency until the result we
may say that it is the proximate cause. If, however, the chain of causation is broken so
that the first cause loses its identity, and a new cause develops bringing about the result
actively and efficiently then we may tag the result to have been proximately caused by
the new intervening cause.

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