An Overview Of Motor Trade Insurance
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The reason for claiming motor trade insurance is known as a proximate cause. A proximate cause of insurance claim is the first incident in the chain of events that provides basis to an insurance claim.
Two major elements of a proximate cause are:
1. The action must contain an anticipated risk
2. The loss or injury must have happened directly due to the negligence of the defendant
For instance, if a car is going along and turns sharply, in an effort to prevent hitting a dog, and results in damaging a street light and six other cars. In this scenario, the car that changed its direction will be the proximate cause. In this situation, the anticipated risk is the dog, which caused the accident, straightforwardly made practically by the driver whose objective was to avoid hitting the dog.
In order to claim motor trade insurance, the cause of loss must be reasonably established, otherwise the insurer will not have a basis on which to pay the claim. In practice, making a claim is not such a straightforward task, since there are the following different types of perils:
* Insured Perils – risks specifically covered by the policy, such as damages to the car under motor insurance.
* Exempted Perils – risks specified under a policy that are not insured, such as motor insurance policy, which excludes any liability for drink driving.
* Uninsured Perils – risks that are outside the scope of cover, such as death of a human being in a traffic accident under the motor insurance policy.
It is a legal requirement for there to be a sufficiently close relation between the covered cause and the covered consequence. This relation is referred to as the doctrine of proximate cause.
This doctrine is universally applied in liability insurance as well as in property insurance. A defendant (the person causing the loss or damage) cannot be held legally accountable for the damage done to the claimant (the person who is making claim) except if the individual can provide evidence to the satisfaction of the court, that the defendant’s actions were the proximate cause of the applicant’s harm. Damage can take place because of a number of situations.
Different types of proximate causes are:
* Single cause- it is a single act resulting in a loss. In such types of cases, one can either be covered or not.
* Chain of happenings- more than a single incident causing a loss, which is further subdivided into a continuous sequence. Here the loss is caused by the earlier event and is in broken sequence. An independent cause intervenes, hence the course of events changes.
* Concurrent Causes- two simultaneous causes produce a loss or damage; in the case where one is covered and the other is excluded, the whole loss is covered.
In spite of the difficulty in forecasting how a court might interpret the proximate cause doctrine in the light of a given set of facts, understanding the requirement of proximate cause is important to motor trade insurance policy coverage analysis.
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