Page 98 - W01TB8_2017-18_[low-res]_F2F_Neat

6/4 W01/March 2017 Award in General Insurance

If they are all insured, the loss is covered. However, it may be necessary to determine which peril caused
a loss if different levels of excess apply to different perils in the chain.

Question 6.2
A fire in a neighbour’s house spreads to a boundary wall.
The following day a storm occurs and the wind blows down the wall. What do you think is the proximate cause of
the loss?

Even if only one event in the chain leading to the loss is an excepted peril, the rule must still be applied
to establish whether that peril was the proximate cause of the loss. If it was, then the insurer is not
liable for the damage.

If the loss is due to an uninsured or unnamed peril, say, water damage caused by putting out a fire, then
insurers are liable if the proximate cause was an insured peril. In section B, we shall look at how these
rules can be modified by policy wordings.
Question 6.3

A storm blew down the wall of a timber building which, when it fell, broke electrical wiring. The broken wiring short-
circuited and caused a fire in the timber building. The fire services were called and the water they used to put out the
fire and to cool neighbouring buildings caused damage to the unburnt contents of the timber building and to the
neighbouring buildings.

What in your opinion, is the proximate cause of the water damage to the unburnt contents of the timber building and
the neighbouring buildings?

B Modification by policy wordings
6 The wording used in the policy can modify the doctrine of proximate cause. For example, a policy may
Chapter state that it will only cover a loss caused solely from a particular peril and independent from all other Reference copy for CII Face to Face Training
causes. With such a policy wording, the policy will not be called upon to respond should there be
concurrent causes of loss.
Similarly, if an exception clause is phrased widely enough, the Court may exclude claims even when the
excepted peril may be no more than mere coincidence. In the case of Cooper v. General Accident Fire &
Life Assurance Co. (1923) the policy contained an exception clause which stated that:
loss or damage occasioned through Riot or Civil Commotion occurring within the land limits of Ireland

was excluded. The insurance policy covered a car which was taken by two men from the policyholder’s
garage under the threat of bodily harm. On the same day, there was civil commotion in the town where
the car was taken. Although the insurer could not show that the act of taking the car by force was a civil
commotion, the fact that there was a civil commotion nearby would suggest that the taking of the car
was connected to it. The Court, therefore, decided that the exclusion clause applied and the claim was
denied.
There are various other phrases which may give rise to a different outcome. It is not within the scope of
this study text to go through each and every possibility. It is enough to say that insurers should be
careful when drafting both insuring clauses and exclusion clauses as the Courts can place quite a lot of
significance on them.