Proximate Cause 近因

Meaning and Importance of the Principle 該原則的定義及重要性

The proximate cause is the dominant and effective cause that sets in motion a chain of events ending in a loss, with no force starting from a new and independent source and acting actively to break that chain. It is judged by effectiveness, not by time: the proximate cause is not necessarily the event nearest to the loss, nor necessarily the first event to happen.

The classic English case of Leyland Shipping shows this. A ship was hit by a torpedo, reached a harbour and later sank there. The court held that the proximate cause was the torpedo, a war peril excluded by the policy, and not the seawater that finally sank the ship, because the torpedo was the dominant and effective cause.

The principle matters because an insurer is liable only for loss proximately caused by an insured peril. Identifying the proximate cause tells us whether a claim falls within the cover. It stops insurers being held liable for remote causes, and it stops losses caused by excluded perils being paid. In Hong Kong the Marine Insurance Ordinance (Cap. 329) also provides that the insurer is liable for loss proximately caused by a peril insured against.

The principle is most important in property, liability, accident and marine insurance. Life insurance generally pays on death whatever the cause, subject to exclusions such as suicide, so proximate cause plays a much smaller part there.

Types of Peril 危險的種類

Insured perils: perils the policy expressly names as covered, such as fire and lightning in a fire policy. The insurer must pay for loss proximately caused by an insured peril.

Excluded perils: perils the policy expressly states are not covered, such as war, nuclear radiation or pollution. Loss proximately caused by an excluded peril is not paid. Some excluded perils can be added back by endorsement for an extra premium.

Uninsured perils (also called unnamed perils): perils the policy neither names as covered nor expressly excludes, such as smoke or water in a fire policy. They are not covered in their own right. However, if they arise as a result of an insured peril, for example water damage from fighting a fire, the resulting loss can still be recovered.

Application of the Principle 原則的應用

Single cause: where there is only one cause, the insurer pays if it is an insured peril, and does not pay if it is an excluded or uninsured peril.

Concurrent causes: if an insured peril and an uninsured peril act together and no excluded peril is involved, the insurer pays. If an insured peril and an excluded peril act together, the insurer pays only for the damage caused by the insured peril where the two effects can be separated. Where they cannot be separated, the insurer pays nothing.

Unbroken chain of events: the cause that starts the chain decides the outcome. If an insured peril starts the chain, the loss is covered even if uninsured perils follow. If an excluded peril starts the chain, the loss is not covered even if an insured peril acts later, for example where a riot leads to a fire and the policy excludes riot.

Broken chain: if a new and independent cause intervenes, the original chain is broken. Each cause and its damage are looked at separately: damage from an insured peril is paid, while damage from an excluded or uninsured peril is not.

Policy Modification of the Principle 保單對這原則的更改

The principle can be changed by policy wording to clarify, narrow or widen the cover. Policyholders and intermediaries need to read the wording carefully, because it may produce a different result from a plain application of proximate cause.

Narrowing cover: if an exclusion refers to loss "directly or indirectly caused by" a peril such as war, the insurer need not pay even where the excluded peril is only a remote cause rather than the proximate cause. Personal accident policies often require the accident to cause injury or death "solely and independently of any other cause", so any other contributing medical cause can affect the claim.

Widening cover: a policy can bring in consequences that would otherwise be outside the cover, for example by extending a fire policy to include fire caused by earthquake or typhoon.

Burden of proof: normally the insured must prove that the loss was caused by an insured peril, and the insurer must prove that an exclusion applies. Some policies shift the burden for certain excluded perils, such as riot, so that the insured has to prove the loss was not caused by that excluded peril.