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Difficulty: MediumBasic Principles of Insurance

Under the legal principle of proximate cause in insurance, an insurer is liable for loss or damage if the direct, dominant, and efficient cause that set the chain of events in motion is an insured peril, even if an intermediate event in the sequence was not specifically named in the policy.

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Answer

True. The principle of proximate cause states that an insurer is liable when an insured peril is the dominant, efficient cause that initiates an unbroken sequence of events leading to a loss.
The statement accurately reflects the principle of proximate cause (causa proxima). In commercial insurance, the proximate cause is not necessarily the closest event in time to the damage, but the active, dominant, and efficient cause that set the unbroken chain of events into motion. If the originating cause is a peril insured against, the insurer is legally responsible for the loss.

Step-by-Step Solution

1
Define the legal principle of proximate cause (causa proxima) in insurance.
Proximate cause refers to the direct, effective, and dominant cause that sets in motion a continuous chain of events leading to damage, without the intervention of an independent new force.
Insurance claims evaluate legal liability based on the primary initiating cause rather than merely the last or remote event in time.
2
Apply the principle to uninterrupted sequences involving covered perils.
If an insured peril initiates an unbroken chain of consequences, all resulting losses directly linked to that initial peril are covered by the policy.
The law holds the insurer accountable for consequences arising naturally and directly from the insured hazard.

Key Concept

Principle of Proximate Cause (Causa Proxima)
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Topics

Basic Principles of Insurance

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