M.J.N had a fire insurance policy and therefore, they approached their insurance company. According to this doctrine, after the insured is compensated for the loss caused by the damage to the property insured by him, the right of ownership over such damaged property shall pass on to the insurer. The cause for the accident should be a direct cause for which an insurance is taken and it should not be a remote cause. also offered here. If insurance company wins the case and collects $ 1.2 million from Mr. Tom, then the insurance company will retain $ 1 million (which it has already paid to Mr. John) plus other expenses such as court fees. In tort law, as Jewitt wrote in Dictionary of English Law: "Causa causans: the immediate cause; the last link or causation.Not the cause (causa sine qua non) of which the proximate cause is an effect, but the nearest cause of the damage or effect for which relief is being sought. A person has an insurable interest when the physical existence of the insured object gives him some gain but its non-existence will give him a loss. 5. 14. If the insurer gets some amount from a third party after being fully indemnified by the insurer, the insurer shall have the right to receive the entire amount paid by the third party. Principle of Causa Proxima (Nearest Cause). The premium on such policy must have been paid regularly. The causa Proxima principle. Understanding Insurance Principles: Loss Minimization And Causa Proxima (Part 3) Leave a comment In the advent of any occurrence of uncertain event, it is the utmost duty of the insured to make sure that if controlled, minimality of loss on the damaged insured property should be taken into account. AS per this definition the causa proxima means the direct, the most dominant and most effective or efficient cause which results in to a definite loss. Types of Insurance. In other words, the question of returning the premium shall not arise in all types of insurance including life insurance. Proximate Cause is an important principle of insurance, which helps in deciding how the loss or damage happen and whether it is the result of an insured peril or not. Both the insurer and the insured, of course, stand on the same footing in relation to the disclosure of material facts. They are: Conditions for Applying the Principle of Indemnity, Essentials of the Doctrine of Subrogation, Insurance | Origin & History | Meaning & Definition | Characteristics, Reinsurance & Double Insurance | Meaning | Differences, Challenges Encountered in Indian Rural Insurance Market | Collaborative Actions, 12 Differences between Insurance and Wagering Contract, Meaning & Essential Features of Economic Planning, Audit of Shares – Issued for Cash | Issued for Consideration other than Cash, Single Storey Industrial Building | Merits, Demerits, Suitability, Production Planning | Characteristics | Importance | Phases | Pre-Requisites, Localization of Industries | Meaning | Causes | Advantages | Disadvantages, Special Privileges of Private Company over Public Company in India. 4 According to the superceded principle, causation of a loss was related to the event nearest in time and directly leading … Insurance is defined as the equitable transfer of risk of loss from one entity to another, in exchange for a premium. Suppose the loss in the case is to the tune of 80,000, then the insured could have been compensated only upto Rs. But the Insurance Company will not pay for the loss over and above its book value. Discuss the core concept of all the principles of Insurance 3. Principle of Causa Proxima (a Latin phrase), or in simple english words, the Principle of Proximate (i.e Nearest) Cause, means when a loss is caused by more than one causes, the proximate or the nearest or the closest cause should be taken into consideration to decide the liability of the insurer. If the insured gets more amounts than the actual loss, the insurance company has right to get back the extra amount paid. Example: A trawler vessel was insured against losses resulting from collision. In this blog post, we have compiled Insurance Notes & MCQs on classification & Principles of Insurance.Go through these and acquaint yourself with the basic insurance terminologies. Causa proxima, non remota spectator is a Latin phrase. 4. Payment of the policy amount is also subject to various conditions. But, if he sells it, he will not have an insurable interest left in that taxicab. When a result has been brought about by two or more causes, you must, in insurance law, look to the nearest cause, although the result would, no doubt, not have happened without the remote cause. If the cause is not fire but some other cause remotely connected with fire, it is not recoverable, unless specifically provided for. He should have called nearest fire station so that the loss could be minimised. Insurance companies are regulated by statutory laws in almost all the countries. While taking treatment in the hospital, he contracted an infectious disease which caused his death. 1. Insurance contract is not made for making profit else its sole purpose is to give compensation in case of any damage or loss. Thus, insurance is only for giving protection against losses and not for making profit. Similarly, a creditor has insurable interest in his debtor. However, fire and accident policies can be assigned to someone only with the prior consent of the insurer. The balance amount, if any will be given to Mr. John, the insured. For example, if a trespasser opens a gate on another person's property, and a stray dog walks through the open gate and kills the property owner's dog, the trespasser is responsible for the dog's death, even though the trespasser did not kill the dog himself. Causa Proxima is a Latin phrase, which means proximate cause. The insurer’s liability gets void (i.e legally revoked or cancelled) if any facts, about the subject matter of insurance are either omitted, hidden, falsified or presented in a wrong manner by the insured. Insurance. The insured must not neglect and behave irresponsibly during such events just because the property is insured. Principle of Causa Proxima: Proximate cause literally means the ‘nearest cause’ or ‘direct cause’. EXAMPLE OF CAUSA PROXIMA • In Etherington & The Lancashire & Yorkshire Accident Insurance Co. 1909 – an Insured held a Policy covering accident but not sickness. The students should note the following points in regard to subrogation. This section provides a definition of proximate cause and explains how it should be determined in practice. Causa proxima, non remota spectator is a Latin phrase. This document is highly rated by B Com students and has been viewed 159 times. There are certain conditions and promises in the insurance contract. This principle consists of, to find one or more reasons for the cause, and the nearest cause should be taken into account to decide the liability of the insurer. The doctrine of proximate cause, which is common to all branches of insurance, must be applied with good sense so as to give effect to and not to defeat the intention. By continuing we’ll assume you’re on board with our cookie policy, 1. It also applies to all contracts of indemnity. “Let the Buyer Beware” shall apply. As such, the claim is not payable under personal accident insurance. "Ballentine's Law Dictionary defines causa causans as: They are Offer and Acceptance, Legal Consideration, Capacity to Contract, Free Consent, and Legal Object. Your Answer is very helpful for Us Thank you a lot! Insurable interest is essentially a monetary or pecuniary interest i.e. Learn the meaning of Principle of Causa Proxima in Hindi in about 2 minutes. Additional materials, such as the best quotations, synonyms and word definitions to make your writing easier are 14. The term nearest cause here means the cause actually responsible for the loss. Marine and life insurance policies can be assigned to someone without the prior consent of the insurance company. Pursuant to this principle, the cause nearest in the order of causation, without any efficient concurring cause to produce the result, must be considered as the direct cause. Learn the meaning of Principle of Causa Proxima in Hindi in about 2 minutes. If the cause is not fire but some other cause remotely connected with fire, it is not recoverable, unless specifically provided for. Principle #7 – Principle of Causa Proxima (Nearest Cause) This is a very important principle of insurance which an insured person should be aware about. On breach of warranty the insurer becomes free from his liability. He was admitted to the hospital. 80,000. Indemnification cannot be more than the amount insured. This principle applies when the loss is the result of two or more causes. If the policy is surrendered, only a lesser amount known as surrender value shall be paid to the policyholder. 3. Husband and wife have insurable interest in each other’s life. It is a rule of law that in actions on fire policies, full regard must be had to the causa proxima. Every person has an insurable interest in his own life. From the above discussion, it is quite evident that the insured is allowed to recover the loss from the insurer only when: 1. the loss has been caused … In 1927, the Plaintiff, Mrs. Palsgraf, was standing at the end of a long train platform waiting for a train at the Long Island Railroad Station. In principles of insurance, a principle of Principle of causa proxima is the fundamental principle. An insured sustained an injury in a motor accident and was admitted in a hospital. The insurance company will find the nearest cause of loss to the property. The rule is that immediate and not the remote cause is to be regarded. They are called as warranties. Understand what is insurance, its types and benefits and 7 most important principles of insurance. Premium once paid shall not be refunded. The burden, however, falls more on the insured than the insurer because he is in possession of the subject matter to be insured. 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