The Principle Of Proximate Cause In Insurance
Until recent past the Principle of proximate cause was not used to be considered as a principle as such. However, the present school of thought has given this doctrine the status of a principle and, therefore, now-a-days it is considered to be one of the six principles of insurance, backed up by sound rules and legal dictum.
The principle of proximate cause virtually revolves around the claims administration and, more precisely, diagnosing the pay-ability 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 straightforward that a loss would be caused by d singular insured or uninsured or an excepted peril, so that a claim would clearly be either payable or not payable. Difficult situations occur where numbers of perils get involved simultaneously, some insured, some uninsured and some still excepted. 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 spectaturs”. Immediate or proximate means Proximate in efficiency and not necessarily in time.
Example of Principle of proximate cause
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 sinking of the ship was torpedo (Leyland shipping Co. V. Norwich Union Fire Insurance Society, 1918). Although, cyclone was nearer to sinking in time, nevertheless, torpedo was the active efficient cause, because the ship was so hard hit by torpedo that it would have definitely sunk. May be 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 low height and scratches his leg a little. He is taken to 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 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 collision and certainly not scratches. Collision being the cause of death is very efficient here whilst scratch is inefficient and remote.