What is proximate cause in insurance terms?

Proximate cause in insurance terms refers to the direct relationship between an act and the resulting loss. In insurance, determining proximate cause is crucial because it establishes whether the event leading to a claim is covered by the policy. It focuses on the immediate cause that resulted in the loss, making it essential for insurers to assess the relationship between the incident and the damage that occurred.

For example, if a hailstorm damages a crop, the proximate cause would be the hail itself, as it is the direct factor that resulted in the loss. Insurers use this concept to validate claims and ensure that the cause of loss falls within the scope of the covered risks specified in the policy. A clear understanding of proximate cause helps both insurers and insured parties navigate the claims process effectively. This is not the same as identifying initial triggers or unrelated causes, which do not establish the necessary connection to qualify for coverage.