Principle of Proximate Cause

It is not the latest, but the direct, dominant, operative and efficient cause that must be regarded as proximate. When an insurance policy is bought it is issued with respect to some peril, which may result in loss to the policyholder. No policy covers all types of risks. The insurance company is liable to indemnify only against the insured perils. The term “Proximate cause“ literally means the nearest cause or direct cause. In insurance parlance it relates to the immediate cause of the mishap, which resulted in the loss. In general insurance there are numerous policies on vehicle insurance, property insurance, fire insurance, burglary insurance, etc. Each policy offers protection from the risks that are mentioned in the policy.

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