Proximate Cause Principle of Insurance
Principles of Proximate cause is concerned with how the actual loss or damage happened to insured party and whether it is a result of an insured peril.
It looks for what is the reason behind the loss, is that is an insured peril or not.
The doctrine of proximate cause is one of the six principles of insurance.
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 straight forward 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.
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.
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.
What is this proximate cause then? It has been well defined in the leading case of Pawsey V. Scottish Union and National (1907) as follows;
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 non remota spectatur”. Immediate or proximate means Proximate in efficiency and not necessarily in time. The consideration is what has actually brought about the result?
A ship was severely torpedoed and was in the process of sinking. Almost immediately there was a cyclonic storm and the ship sank. It was held that the proximate cause of the sinking of the ship was torpedo (Leyland Shipping Co. V. Norwich Union Fire Insurance Society, 1918).
Although, the cyclone was nearer to sinking in time, nevertheless, a torpedo was the active efficient cause, because the ship was so hard hit by a torpedo that it would have definitely sunk.
Maybe the cyclone has accelerated the speed of sinking and it can simply be regarded as a remote cause.
To take another example, a man falls from a ladder at a low height and scratches his leg a little. He is taken to a hospital and in the hospital he contacts cholera from the next bed patient and dies.
The proximate cause of his death is cholera and not falling from the ladder, or for that matter scratches on his leg, even though it can be wrongly argued that has he not had scratches on his leg he would not have gone to the hospital and contacted cholera as such.
In this case, scratches may be a remote cause. Let us take another example. A man scratches his leg falling from a ladder. He is being taken to hospital by an ambulance.
On way to hospital, the ambulance meets a head-on collision with a lorry and all persons on board the ambulance die including our man.
The proximate cause of our man’s death is the collision and certainly not scratches. Collision being the cause of death is very efficient here whilst scratch is inefficient and remote.
Certain quotations may be very helpful to the students at this stage and they should try to realize the implications of such quotations, which would help them in removing a number of confusions that might occur in their mind about proximate cause.
Lord Bacon in his Maxims of Law has said,
“it was infinite for the law to consider the cause of causes, and their impulsions one of another; therefore it contenteth itself with the immediate cause, and judgeth of acts by that, without looking to any further degree”.
In Leyland Shipping Co. V. Norwich Union Fire Insurance Society (1918), the maxim laid down was,
“To treat the proximate cause as if it was the cause which is proximate in time is out of the question. The cause which is truly proximate is that which is proximate in efficiency. That efficiency may have been preserved although other causes may meantime have sprung up, which have yet not destroyed it or truly impaired it, and it may culminate in a result of which it still remains the real efficient cause to which the event can be ascribed”.
In YORKSHIRE DALE S.S. Co. V. MINISTER OF WAR TRANSPORT (1942), the statement made was,
“Choice of the real or efficient cause from out of the whole complex of the facts must be made by applying commonsense standards. Causation is to be understood as the man in the street, and not as either scientist or the metaphysician would understand it”.