Chapter 4 Flashcards
What is the significance of causation in insurance claims?
: Causation determines whether a particular loss is covered under the policy by examining the chain of events leading to the loss and identifying the proximate cause.
What is the “but for” test in causation?
This test asks whether the loss would have occurred “but for” the insured event. If the answer is no, the insured event is considered the cause of the loss.
What is the role of exclusions in causation?
Exclusions in a policy specify certain perils or situations that are not covered, even if the proximate cause falls within the coverage. If an exclusion applies, the claim will not be paid.
How does the Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corp Ltd (1974) case relate to causation?
This case established that if two concurrent causes of loss occur, one covered and one excluded, the insurer is not liable if the excluded cause contributed to the loss.
What is “concurrent causation”?
Concurrent causation occurs when two or more independent causes contribute to the loss. If one of the causes is excluded, the claim may be denied depending on policy wording.
What is the significance of “chain of events” in determining causation?
Insurers will assess the chain of events leading to the loss to identify the proximate cause. If the chain is interrupted by an excluded peril, the claim may be denied.
What is the purpose of the “contra proferentem” rule in interpreting exclusions?
If the wording of an exclusion is ambiguous, it will be interpreted against the party that drafted it (usually the insurer), potentially leading to the claim being paid.
How does the Insurance Act 2015 affect claims related to causation?
The Act ensures that if a breach of warranty or other condition could not have increased the risk of the loss that occurred, the insurer cannot rely on that breach to deny the claim.
How does Miss Jay Jay (1987) apply to concurrent causes?
In Miss Jay Jay, the court held that if both an insured and an uninsured cause contribute to the loss, and neither can be disentangled, the insurer must pay the claim.
What is the significance of the Johnston v West of Scotland Insurance Co (1913) case for causation?
This case reinforced the idea that the proximate cause must be the effective cause of the loss for the claim to be payable, even if other factors contributed to the damage.
How does policy wording impact causation in claims?
The policy wording, particularly the definitions of insured events and exclusions, directly influences how causation is assessed and whether a loss is covered.
What is the loss of chance doctrine in relation to causation?
The “loss of chance” doctrine applies when the insured’s actions, or lack thereof, reduce the likelihood of mitigating or avoiding the loss. Insurers may reduce liability if the insured failed to act.
How does the Fairchild v Glenhaven Funeral Services (2002) case apply to causation?
This case allowed claims to succeed in situations of multiple possible causes, showing that causation in insurance can sometimes be flexible, especially in cases of employer liability.
What is indirect loss, and how is it treated in claims?
Indirect loss, also called consequential loss, refers to secondary losses that result from the initial insured event. These losses may not be covered unless explicitly stated in the policy.
What role does foreseeability play in determining causation?
Foreseeability assesses whether the loss was a predictable consequence of the insured event. If the loss is not foreseeable, the insurer may dispute coverage.
