Page 208 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

The classic definition of proximate cause is -

(i) the active efficient cause.

(ii) that sets in motion a train of events

(iii) which brings about a result.

(iv) without the intervention of any force started and working actively
from a new and independent source.

n The fire policy provides for payment of direct loss suffered by the
insured from the damage or destruction by fire or other insured
peril of certain specified property.

n The insured may incur several other losses of a consequential
nature which are not intended to be covered, as they are
indirect or remote consequences of the insured peril.

n Thus, loss of profits, increased cost of running the business, etc.
are losses produced by the conditions created by fire and not
proximately caused-by it can be covered under a separate
Consequential loss Insurance Policy.

The doctrine of proximate cause is invoked to answer
the two questions which arise when a loss takes place :-

(a) Was the loss caused by perils insured ?

(b) Was the loss caused by an excepted peril ?

Insured Perils

n The peril need not be the immediately preceding cause of the
damage; but it must be established that the loss is connected
with the peril by a chain of events leading naturally and in the
ordinary course of events, from one to the other.

Sashi Publications - www.sashipublications.com 221

Copyright@ The Insurance Times. 09883398055 / 09883380339