Relevance of Proximate cause - Insurance Contract, Principles of Insurance Video Lecture | Principles of Insurance - B Com

proximate cause proximate cause is a
claims related principle it was defined
in a classic case of Posse versus
Scottish Union and national in 1907 in
such a classic case the judge came up
with the definition of proximate cause
which is the active efficient cause
setting a motion a chain of events
bringing about a loss without any other
force influencing such a loss in simple
language this means that the proximate
cause is that cause which causes a
strain of events leading to a loss let
us take an example if there is storm
causing a ward to collapse and then a
short-circuit resulting in a fire having
fireman causing water damage then of
course you can easily relate to the fact
that of storm was the proximate cause in
this example since it started off a
train of events causing the eventual
loss which is water water damage here in
this case the proximate cause is again
the first cause setting in motion a
chain of events earthquake in this case
you will observe that there is a gap in
the Train of events fire damaged a wall
leaving this wall in a bad state of
repair only several weeks after again
bringing this wall down in this case we
cannot say that the fire started off the
train of events but it's the game
which caused the world to collapse
another example to demonstrate proximate
cause is over either falling off a horse
and injuring himself lying on the ground
in the cold
catching pneumonia and eventually dies
this is a case of proximate cause
whereby the accident caused the death of
the rider however it is not always the
case where the proximate causes the
first cause in fact if we had to change
the story of the rider and say that the
rider fall off the horse then was
injured taken to hospital contracting a
disease from a neighboring patient and
also dies in this contrasting case you
will note that the facts are not the
same although we had the same accident
the same cause and the same loss in
which the rider also died however there
is a new intervening cause would you
expect an injured rider to be taken to
hospital and eventually to die no
therefore there must have been a new
intervening cause in which case the
disease from a neighboring patient will
become the proximate cause and in this
case will be that cause which has
resulted in the loss which is the death
another example war air raid blackout
and theft from building in this case it
is not the war but it's the theft itself
which is the parallel causing the loss
another war-related example of proximate
cause in this particular case
the war was deemed to be the proximate
cause another case taken from case-law
fire and mob gathered to watch this fire
riot resulted gloss damaged in this case
it's not the fire that caused the glass
damaged but the right and therefore the
parent causing the loss the proximate
cause of the loss is right
next is indemnity indemnity is the way
an insurer places the initials as before
the loss indemnity policies are
different from benefit policies benefit
policies such as life and personal
accident are not indemnity policies in
which case the amount being paid does
not reflect the financial position
enjoyed prior to the Eagles in fact the
Life Assurance and person accident
insurance the insured is given a
compensation there are different methods
of applying indemnity in fact the option
of providing indemnity rests with the
insurer which means that the insurer has
a right to choose whether to pay the
insured in cash whether to opt for
repair whether to replace or reinstate
as new to indemnify an insured on the
property insurance the amount of
indemnity is calculated by paying the
amount of a new replacement less an
amount for warranty and or betterment if
it is the case in liability the amount
of indemnity amount to damages and other
costs
Indemnity may be limited up to the
amount which is being insured you will
appreciate that the insurer will not pay
more than the sum insured or limit of
indemnity on the policy furthermore some
insurers apply and access deductible or
franchise in which case an amount is
deducted from the final settlement when
the insured is not adequately insured
the principle of average applies which
means if the insured is underinsured the
insurers will pay proportionately less
should there be a claim furthermore
there are some property policies that
come with single article limits in which
case the insurer will pay no more than
the single article limit