Proximate Cause
Proximate Cause is another important term in short term insurance, including car insurance. Proximate Cause refers to the direct, active or dominate cause that resulted in a loss which is covered by insurance. Car insurance companies are only responsible to meet claims for losses cause by an Insured Peril. The proximate cause also indicates that the loss should have been the result of an event which was not interrupted by another event. If another, independent event is the cause of a loss, and this secondary event is not covered as an insured peril, the insurance company cannot be held liable.
Proximate cause in insurance contracts is nowadays referred to in policy documents as Insured Perils. Insured perils must be clearly defined in car insurance policies for example fire, theft, carjacking, accidental damage. Proximate cause allows insurers to issue policies for certain perils only while there are other perils or causes that they may decide to exclude. Insurance companies may also exclude certain results. The number of different proximate causes or insured perils will be taken into account when the car insurance premium is calculated.
When applying the Proximate cause there is certain rules that come into play, for example, the risk that you insure against must actually happen before you can claim. You cannot claim on your car insurance because you fear that your car may be stolen. You can only institute a claim if and when the event of theft actually took place.