Anyone who’s read through the small print on their insurance policy, especially if their insurance claim is rejected, will know how incomprehensible it can be. Unfortunately, it’s essential to understand, and nothing more than the Proximate Clause.
What Is the Proximate Clause?
A key principle of insurance, the Proximate Clause is used by Loss Adjusters “to assess the exact cause of the damage or loss and determine whether that particular cause is covered by the policy.”
Two key court judgements* illustrate the kind of distinctions made. In both cases, a wall was blown down in a gale after having been previously damaged. In one, where the wall was blown down shortly after being struck by lightning, the lightning was ruled to have been the cause, whereas in the other, where the wall was damaged by fire a few days before being blown down, the fire wasn’t considered the cause.
The distinction here is because, in the second case, the wall stood for several days after the fire, and it was only the gale that made it collapse. In the first, though, it could be assumed that the gale might not have had such an effect without the lightning-strike.
How Might a Proximate Clause Affect You?
A decision by the Loss Adjuster on what’s counts as a proximate cause could depend on what’s actually covered by the policy when making that insurance claim. For instance, it may seem reasonable for an upper-floor office not to be insured against flooding.
However, if the ground floor is damaged by flooding to the extent that the whole building has to be closed, the company using the upper floor may not receive compensation for loss of business because the situation was caused by flooding.
On the other hand, consider a case where a fire in a plastics factory results in particles spread by the wind damaging the stock of a nearby clothing factory. You may expect this to be covered by the plastic factory’s fire policy, but the Loss Adjuster could consider the actual cause to be wind-borne pollution, which isn’t covered.
Know Your Risks
The moral? It’s vital to make sure any insurance policy you take out covers all possible proximate causes if you need to make that insurance claim. Nothing should be ruled out without careful examination.
This is one of many reasons why it’s essential to consult an insurance broker, who’ll help you sort this out, and to use a Loss Assessor for your claim. If you need help with a claim, follow this link >>>.
* Roth v South Easthope Farmers’ Mutual Insurance Co. (1918) and Gasgarth v Law Union Insurance Co. (1876)