Hawaii Insurance License Practice Exam

What does proximate cause refer to in insurance terms?

1. An event that is incidental

2. An unbroken sequence of events resulting in a loss

3. A temporary cause of loss

4. An indirect cause of loss

The correct answer is: An unbroken sequence of events resulting in a loss

Proximate cause in insurance refers to an unbroken sequence of events that leads to a loss. It is the primary reason why a loss occurs, and understanding this concept is essential for determining coverage under an insurance policy. In many insurance claims, it is necessary to establish that the loss is directly linked to a specific event or set of events to ascertain liability and compensation. When evaluating whether a claim is valid, insurers assess whether the proximate cause of the loss falls within the scope of coverage defined in the policy. If the loss can be traced back through a series of events without interruption to a covered peril, it is considered to have proximate cause, and the insurer is typically obligated to provide coverage. This explanation highlights the importance of identifying the chain of events that led to the loss, thereby reinforcing the overall principles of causality in the context of insurance. Understanding proximate cause helps both insurers and policyholders manage expectations regarding claims and the protection afforded by the insurance contract.