In insurance, the rule of ‘proximate cause‘ is often called into action “to determine whether an event covered by a policy or an event excluded by the policy is the dominant or effective or operative cause” (as per English Law)
With this knowledge, let us look at a recent case – a good example of how Causa Proxima is determined.
In 1942, German forces dropped a bomb in Exeter (close to the campus of the University of Exeter) which did not explode and was undiscovered until February 2021.
During construction works adjacent to the University, the bomb was discovered and bomb disposal experts called in. They determined that the fuse of the bomb was very degraded, and the condition of the bomb required a controlled explosion.
This controlled explosion caused damage to the University’s property and required thousands of students to be rehoused for a short period of time.
The University claimed property damage and business interruption losses under an insurance policy with Allianz.
If you ever had a look at your home insurance or even life insurance policy, you’d notice the following phrase under EXCLUSIONS:
“War, invasion, hostilities (whether war is declared or not), civil war, rebellion, revolution or taking part in a riot or civil commotion”
Similarly, in this case Allianz argued that the dropping of the bomb – a wartime action – was the proximate cause of the loss and thus the claim would not be payable.
The University in turn argued that the proximate cause of the loss was the deliberate act of the bomb disposal team detonating the bomb nearly 80 years after the bomb was dropped! The bomb never exploded by itself.
When the case went to court, it was ruled that the proximate cause was indeed the dropping of the bomb and that the passage of almost 80 years between the occurrence of the proximate cause and the damage was irrelevant, even though the damaged property did not even exist at the time the causal event occurred.
Allianz did not have to pay the claim.