Study 1 - Introduction to Risk and Insurance - Proximate Cause

Question 1

Proximate Cause

Answer 1

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the even would not have happened.

To qualify as the proximate cause, there must exist an uninterrupted unfolding or events, without the intervention of another main cause, from the initial act to the conclusion

Question 2

Example of Proximate Cause of Loss

Answer 2

Clara’s building collapses after being damaged and weakened by a raging fire in an adjacent building. Although the building collapsed, the fire next door directly precipitated the collapse and qualifies as the proximate cause of the loss Clara is entitled to claim under the fire peril of her policy.

Question 3

Remote Cause

Answer 3

A cause that is not the proximate cause of loss and is separate from the proximate cause in a chain of events leading to a loss

Question 4

Example of Remote Cause of Loss

Answer 4

Clara’s building is not damaged when a fire destroys an adjacent building. However, when Clara’s neighbour hires a contractor to do repairs on the adjacent building sometime later, the contractor negligently causes Clara’s building to collapse. The fire is a remote cause in this case-the proximate cause of the loss is the action of the contractor

Question 5

Immediate Cause

Answer 5

A cause that is not the proximate cause of loss but is the last link in a chain of events leading to a loss.

When the loss is caused by either a Remote or Immediate Clause, the insured does not recover for the loss from the insurer. When an excluded peril is the proximate cause of the loss, the insured cannot recover under the policy.