Scribd Logo
Upload

Welcome to Scribd!

  • Chapter 4-Proximate Cause

    Uploaded by

    Gemini Patel
    30 views7 pages
    The document discusses proximate cause in the context of an insurance claim. It describes a scenario where an electronics showroom catches fire and goods worth Rs.15 lakh are destroyed by the fire, while goods worth Rs.5 lakh are destroyed when the fire brigade uses water to put out the fire. The owner is worried that the insurance company will not pay for losses caused by the fire brigade's actions. If they did not, people may choose not to call the fire brigade when fires occur, letting goods burn instead. Therefore, to determine insurance payouts, the proximate or root cause of the loss must be identified to see if it is covered by the policy.

    Original Description:

    Original Title

    7. Chapter 4-Proximate Cause

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses proximate cause in the context of an insurance claim. It describes a scenario where an electronics showroom catches fire and goods worth Rs.15 lakh are destroyed by the fire, while goods worth Rs.5 lakh are destroyed when the fire brigade uses water to put out the fire. The owner is worried that the insurance company will not pay for losses caused by the fire brigade's actions. If they did not, people may choose not to call the fire brigade when fires occur, letting goods burn instead. Therefore, to determine insurance payouts, the proximate or root cause of the loss must be identified to see if it is covered by the policy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    30 views7 pages

    Chapter 4-Proximate Cause

    Uploaded by

    Gemini Patel
    The document discusses proximate cause in the context of an insurance claim. It describes a scenario where an electronics showroom catches fire and goods worth Rs.15 lakh are destroyed by the fire, while goods worth Rs.5 lakh are destroyed when the fire brigade uses water to put out the fire. The owner is worried that the insurance company will not pay for losses caused by the fire brigade's actions. If they did not, people may choose not to call the fire brigade when fires occur, letting goods burn instead. Therefore, to determine insurance payouts, the proximate or root cause of the loss must be identified to see if it is covered by the policy.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 7

    Proximate cause

    Proximate Cause

    • An electronics showroom contains stock worth Rs.50 lakhs. One day it unfortunately catches fire.
    Immediately the fire brigade is called upon. The fire brigade uses water guns to douse fire
    • When the fire is doused, the owner takes a stock of the losses All his goods are insured
    • After taking stock he finds out that goods worth Rs.15 lakh are destroyed. However fire destroyed
    goods worth Rs.5 lakh only. The rest of the goods were destroyed by the water sprayed by the fire
    brigade.

    www.proschoolonline.com
    Proximate Cause

    • Now the owner is worried. He wants to know whether the insurance company will settle the losses
    caused by the fire brigade.

    www.proschoolonline.com
    Proximate Cause

    • To find this out lets imagine that the insurance company refuses to pay losses arising out of fire
    brigade action. Next time if there is fire at a place which is insured; What will the people do

    www.proschoolonline.com
    Proximate Cause

    • They will not call the fire-brigade. Let the goods burn. The insurance company will settle the losses.
    But if fire brigade destroys some goods it will be a huge loss

    www.proschoolonline.com
    Principle

    • Therefore, to determine if loss is payable, the following two questions need to be answered:
    • What is the root cause of the loss?
    – Is the peril, identified above, specifically covered under the insurance policy? Let us examine each in
    – detail.
    – What is the Root Cause of the Loss?
    • Sometimes, the root cause of the loss may be straightforward.
    • Example, two cars may have an accident on the road.
    • At other times, it may not be so simple.

    www.proschoolonline.com
    Definition

    • Proximate cause is the active efficient cause that sets in motion a train of events which bring about a
    result, without the intervention of any force started and working independently from a new source.

    www.proschoolonline.com

    You might also like