Insurance policies provide cover against losses caused by what are commonly known as insured events or perils.

Insurers will normally list the events or perils covered and similarly will list excluded perils. It is pretty obvious that the insurer does not intend to pay for excluded perils.

There is a third category, known as unnamed or unlisted perils.

This example shows all three:

• A policy may include Fire as a listed peril, but exclude explosion cover. Whilst neither listed nor excluded smoke damage may occur as a result of a fire. As it isn't specifically excluded, and as it is as a direct result of the insured peril of fire, insurers would be liable.

The fire is known as the "proximate cause" of the smoke damage. Basically if the proximate cause is an insured peril or event, the resultant damage is likely to be covered.

The usual definition comes from Pawsey v Scottish Union and National 1907:

• " The active, efficient cause that sets in motion a train of events, which brings about a result, without the intervention of any force started and working actively from a new and independent source"

This simple example might help:

• While driving you suffer an accident breaking your leg.
• You get taken to hospital where as a result of surgery, septicaemia sets in and you die.
• Death, although from septicaemia (blood poisoning) is a direct result of the accident and is therefore covered, although you didn't actually die in the accident

Using a similar example:

• You have the accident, break your leg, but don't develop septicaemia.
• You go home and come back 2 days later to fracture clinic. Whilst in fracture clinic you contract Legionnaires disease from the air conditioning. You are not really having a good time! You die.
• This would not be covered, the legionnaire's disease was already there, and it was active and independent of the original accident.

Proximate Cause is an important principle, especially for those staff involved in claims. Sometimes a claim form does not always tell the full story. What may appear to be invalid as a claim may in fact be a valid. Each case must be looked at on its own merits and the proximate cause identified.