Part 3: Claims

Why: The Principle of Proximate Cause is one of the fundamental principles of insurance, used to identify the most direct, effective and dominant cause (proximate cause) of the loss. If the proximate cause is an insured peril, the insurer is liable; if it is an excluded peril, the insurer is not liable. For example: if an earthquake (excluded) causes a fire (covered), the proximate cause is the earthquake, and if earthquake is excluded, there is no coverage.

Why: After an insured event, the insured typically has the following duties: (1) notify the insurer promptly; (2) take reasonable steps to prevent further loss ('duty to mitigate'); (3) preserve the scene of damage and not repair before the insurer's inspection; (4) provide all relevant documents and cooperate with investigations. Failure to notify promptly or deliberately enlarging the loss may affect the right to claim.