A major term used in insurance is Cause of Loss (also called a Peril). Insurance coverage responds when a loss results from a cause of loss identified in an insurance contract. Examples of causes of loss are fire, windstorm, operation of a motor vehicle, burglary, acts of negligence, accident and sickness and other conditions that can cause a loss. Sometimes the cause of loss is called an Act of God, particularly when it is an unusual and unexpected, perhaps even a catastrophic happening.
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The claims are payable under Insurance policies if they arise out of events which are proximately caused by the insured perils. In other words the proximate cause of the event has to be peril covered by the Policy, so as to constitute a valid claim. Proximate cause has been defined as “the active, efficient cause that sets in motion without the intervention of any force started and working actively from a new and independent source.” Single Cause : If the loss is brought about by a single cause, which is an insured peril, obviously this is the proximate cause and thus there is a liability under the Policy. As for example, a ship caught in heavy weather and sinks along with the cargo. The resultant loss is payable as the proximate cause is a peril of the sea covered under the marine Insurance Policy. Concurrent Causes : If there are concurrent causes, as long as no excepted perils are involved, the loss is recoverable, provided one of the causes is an insured peril However, if excepted perils are involved and the consequent losses can be separated, there is liability for those caused by the insured peril. but if it is not possible to s separate the effects of one from the other, there is no liability at all.C.C.E.F. : Customer Centralized Examination Facility.