Modern Law of Marine Insurance Volume Five, The
CHAPTER 8
Page 170
The proximate causes of loss
Page 170
Introduction
8.1 The cause of the loss for which the assured seeks indemnification under the insurance contract is determined as matters of both fact and law. The policy wording and the way the loss has been brought about will be interpreted to find out what the parties to the contract agreed as to the risk that the insurer would cover, and whether that has been satisfied on the facts. A statutory guidance for such construction is found under section 55(1) of the Marine Insurance Act 1906 (MIA 1906), which is not confined to marine insurance but applies to all types of insurance contracts.1 8.2 The critical wording of s 55(1) of the MIA 1906 is “any loss proximately caused by a peril insured against”. The question of “what caused the loss” will be asked in every single insurance claim given that policies list insured and excluded risks which limit the coverage agreed by the insurer. Since each insurance claim will be confined to its own facts and the policy-relevant wordings, in search for the proximate cause, the weight of the evidence and measuring their contribution to the loss occurrence will vary from case to case. Moreover, where it was not possible to single out one of the rival causes of the loss as its proximate cause, the courts have developed the so-called “concurrent causes” formula whereby they proposed a fair and balanced outcome which reflects what the parties agreed the insurance contract to cover. This chapter will look for answers to the following two questions: Is the word “proximate” somewhat misleading or has its meaning always been well understood by the insurance law and practice? Second, is the “concurrent causes” formula only theoretical, and if it serves any useful purpose, is it only when an exclusion from the insurance cover is in question?Terminology
Is the word ‘proximate' misleading?
8.3 Section 55 of the MIA 1906 providesunless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.