1-H Cause & Loss

Question 1

Proximate Cause

Answer 1

When there is an unbroken chain of events between an occurrence and a loss, then that occurrence is the proximate cause of the loss.

Question 2

Occurrence

Answer 2

An event, incident, or condition that causes damage.

unintentional and random

Question 3

The original occurrence:

Answer 3

• Causes damage that then leads to more damage
• Is the proximate cause of all resulting losses.

Question 4

Proximate cause can determine which losses are covered by an insurance policy

Answer 4

Damages are covered:
- If caused by a covered peril
- if their proximate cause was a covered peril.

Question 5

Direct Loss

Answer 5

Physical harm to tangible property.

-Structural damage to house
-Kitchen walls and cabinets burned by fire.
- Flooring damaged by water used to put out fire.

Question 6

Indirect Loss

Answer 6

An economic loss that results from a direct loss.

EX. Renting a hotel room until home is repaired
- Lost rental income if damages cause a tenant to move out.

Question 7

Direct VS indirect

Answer 7

If fire destroys a bakery’s delivery trucks:\

-Physical destruction of the trucks is a direct loss.
-Cost of renting new trucks to keep business running is an indirect los.