Principle of ‘Causa Proxima’:
- The loss of insured property can be caused by more than one cause in succession to another.
- The property may be insured against some causes and not against all causes.
- In such an instance, the proximate cause or nearest cause of loss is to be found out.
- If the proximate cause is the one which is insured against, the insurance company is bound to pay compensation and vice versa.
Principle of Causa Proxima (Latin phrase) or in simple English words, the Principle of Proximate Cause (nearest) means when a loss is caused by more than one causes, the proximate or the nearest or the closest cause should be taken into consideration to decide the liability of the insurer.
For Example: a fire might cause a water pipe to burst. Despite the resultant loss being water damage, the fire would still be the proximate cause of the incident. In the majority of claims, the cause is obvious and so it is relatively easy to establish whether it is a peril covered by the policy