This Latin phrase meaning the proximate cause is used in case of Marine loss. It is an act, whether intentional or negligent, that is determined to have caused someone else’s damages, injury, or suffering. It’s them is where the loss has been brought about by several causes regard should be given to the proximate or the nearest cause. It is concerned with how the actual loss or damage happened to the insured party and whether it is a result of an insured peril. If the proximate cause of the loss is fire, the loss is recoverable. Fire risks do not cover damage by an explosion unless the explosion causes actual ignition, which spreads into the fire. If the cause is not fire but some other cause remotely connected with fire, it is not recoverable, unless specifically provided for. It is mainly applicable in the case of marine insurance.
Cause Proximais a key principle of insurance and is concerned with how the loss or damage actually occurred and whether it is indeed as a result of an insured peril. It is used in tort law to link negligence to liability for an injury caused by an accident. It looks for what is the reason behind the loss, is that is an insured peril or not. It is the duty of the insured, or any other person on his behalf, to give immediate notice of fire to the insurance company so that they can safeguard their interest, such as, deal with the salvage, judge the cause and nature of fire and assess the extent of loss caused by the fire. While determining the liability of the insurer, the proximate (nearest) cause alone and not the remote cause is to be considered. The insurer is not liable for the remote cause even if it is one of the insured perils.