Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)General InsuranceMedium
A homeowner files a claim after a severe thunderstorm causes a tree to fall on their garage, causing significant structural damage. The insurance company investigates the claim and determines the loss is covered. However, before the repairs are completed, a second, unrelated storm causes a different tree to fall on the same garage, causing further damage. This scenario best illustrates which fundamental insurance concept?
- ASubrogation
- BProximate Cause
- CAdhesion
- DIndemnity
Show answer & explanationAnswer & explanation
Correct answer: B. Proximate Cause
Proximate cause refers to the active and 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. In this case, each storm is a separate proximate cause for its respective damage.
Why the other options are wrong
- A. Subrogation is the insurer's right to seek recovery from a third party, not applicable here.
- C. Adhesion refers to the 'take it or leave it' nature of insurance contracts, not related to loss causation.
- D. Indemnity aims to restore the insured to their pre-loss condition, but doesn't explain the cause of multiple losses.
Proximate Cause
The active and efficient cause that sets in motion a train of events that brings about a result, without the intervention of any force started and working actively from a new and independent source.
- Directly responsible for the loss.
- Important for determining coverage.
- Can be multiple proximate causes for different losses.
Memory trick: Don't get lost in the details; find the proximate cause of the loss.