1 Keys for Chapter 4 ？ Why do you think the insurance company refused the insured's claim when the insurer discovered the criminal record of her husband? Mrs. Thomas did not disclose about her husband's criminal record to the insurer. ？ Do you think the insurer was justified in refusing the claim? If the proposal form has such requirement in this respect, the insurance company was justified in doing so. Otherwise, it is unfair. ？ What do you think insurers can do or should do to prevent similar disputes arising in future? Proposal form must make clear that family criminal record had to be disclosed by the applicant.

2 Chapter 5 The Principle of Proximate Cause

3 contents 1. Meaning of proximate cause 2. Occurrence of trains of event 3. How do we determine the efficient cause? 4. Examples of proximate cause 5. Remote causes 6. Exclusions 7. Indirect causes 8. Summery of proximate cause

4 1. Meaning of proximate cause  An active and efficient cause that sets a train of events in motion and brings about a result. It has no intervention of any force to start and works actively from a new and independent source. Example: storm Damage to the wire Damage to the wire fire house Property loss Property loss

5 Other example: six dominoes

 Tapping Result

7  Example One A storm blew down the wall of timber building;  This falling wall broke electrical wiring;  The broken wiring short-circuited and sparked;  The sparks cause a fire in the timber building;  The fire brigade was called;  They used water hoses to put out the fire and to cool neighboring building;  The water caused damage to the unburned contents of the timber building and to the neighboring buildings.  The direct line of causation between the storms, the collapse of the gable, the fire damage and the water damage. And we know what the proximate cause is. A storm blew down the wall of timber building;  This falling wall broke electrical wiring;  The broken wiring short-circuited and sparked;  The sparks cause a fire in the timber building;  The fire brigade was called;  They used water hoses to put out the fire and to cool neighboring building;  The water caused damage to the unburned contents of the timber building and to the neighboring buildings.  The direct line of causation between the storms, the collapse of the gable, the fire damage and the water damage. And we know what the proximate cause is.

8  Example Two   An earthquake overturned an oil stove;   The split oil caught fire from the burning wick;   The burning oil set fire to the building;   The first building, set fire to a second building;   Sparks and burning embers blown in a breeze set fire to a third building;   Several more buildings caught fire in the same ways;   Eventually, 500 yards away from the first fire, a building caught fire from its neighboring building. the fire in this last building was the proximate cause by the earthquake. the fire in this last building was the proximate cause by the earthquake.

9  Example Three   A dropped match set fire to rags in a garage;   Fire developed and overheated some acetylene gas cylinders;   The cylinder exploded;   A wall of the garage was blown out and burning materials were blown onto a neighboring office;   The office caught fire. It is clear that these losses can be traced back to the dropped match.

10  Example Four  Lightning damages a building and weakened a wall;  Shortly afterwards, the wall was blown down by high winds. Do you think the lightning was the proximate cause of all the damage?  Example Five  Lighting damaged a wall and left it weakened;  Several days later, a gale blew the wall down. Do you think lightning was the proximate cause of all the damage?

11 5. Remote causes If damage has occurred but there is no imminent likelihood of further loss, then the original cause becomes weaker and weaker as time goes by. If there was time but nothing had been done, in other words, if no measures are taken, the original cause is deemed to be too remote. It becomes a remote cause.

12 8. Summery of proximate cause We know that the insured peril need not be initial cause. Secondarily, the insured peril need not be a direct result of the operation of an expected peril. Thirdly, damages as the direct result of an insured peril is covered in the policy even if the immediate peril which causes that damage is not mentioned in the policy. Therefore water or smoke damage after fire is covered. Fourthly, property can be covered in the policy even if the named peril does not actually cause damage to the insured property, so long as the named perils operate and its results cause loss to the insured. For example, if the building next door to the insured catches fire and the only damage that the insured suffers is by water or smoke, his fire policy will operate and cover the water and smoke damage.

13 Fifthly, the risk which is insured against losses must actually take place. The fear of losing goods by an insured peril is not loss by the peril. Sixthly, further damage to the subject matter of insurance, due to attempts to minimize or reduce a loss which has already taken place, is covered in the policy. Therefore, water damage from sprinklers or firemen’s hoses is covered in the insurance contract. Seventhly, a new act intervention, for example, during a fire, if fire onlookers cause damage to the surrounding property, the cause of such damage is the misdemeanor of the crowd onlookers, not the fire. So the insurance company is not liable for surrounding property which is damaged by the crowded onlookers

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