Friday, April 8, 2022

Review and summarise some cases from the Insurance Law Book

A dispute between the insured and the insured may arise about the true cause of loss, and it may be difficult to separate the effects or consequences of achieving the insured risk and the excluded risk of the two hazards being linked in one way or another.


The principle of direct reason stipulates that the loss must have occurred as a direct result of the insured risk in order to be compensated by the insured "Article (55)1" of the Maritime Insurance Act of 1906, which is allocated for the direct reason, "unless the policy states otherwise the insured person is liable for any loss caused by a insured risk but is not responsible for any loss that did not occur as a direct result of a insured risk." In insurance, the direct cause is determined by the terms and conditions of the policy.

Insured, excluded and unsecured dangers

"So-called hazards" are relied upon to place restrictions on the insured hazards and any loss caused by any other cause that is not covered (e.g. fire document, fire and lightning coverage, specific types of explosions and excluding earthquake, riot and other hazards). Unsecured and excluded risks, i.e. not mentioned in the document, are defined as "unsecured" hazards. All risks are covered by all risks except those that are excluded and there is no known "uninsured" risk.

What does it mean for the direct cause?

Is the main cause of loss or the cause with the strongest effect. Consider that the cause must be "major" because of non-major or indirect causes that played a lesser role in the loss and are known as distant causes. Lord Wright, in The Yorkshire Dale v. Minister for War Transport, said that the choice of the main or effective cause from a set of complex and interlocking facts must be taken into account and that causality must be understood as understood by the average person and not as understood by the world or the Mawari.

It is not difficult to find the immediate cause of the loss if the circumstances and circumstances are simple and clear and there is not long time between the event causing the loss and the damage that has resulted, but differences arise when the loss occurs as a result of a series of isolated events and interfere with unsecured or excluded risks.

Chain of Events

The previous judicial precedent on the subject of direct cause came in the decision of the House of Lords in the case of "Meland Schipping v. Norige Fire Insurance Company" 1918 The ship "Akara" was secured with a policy of insurance against the dangers of the sea and excludes the dangers of war. The ship was hit by a blown to the enemy, which led to a gap in the hull of the ship, which led to the sinking, and the captain was able to reach the port of "Lee Harf" and began the repair process and during which a storm blew the port to avoid the ship to avoid sinking in the port, but it sank after it left. The House of Lords had to decide whether the direct cause was the injury from the enemy's cracker (an excluded hazard) or the storm (covered danger) that was the last event in the "chain of events" that led to the sinking of the ship. The House of Lords acknowledged that the direct cause was the damage caused by the cracker, as the damage remained active and effective throughout the time, i.e. the "chain of events" did not stop between the injury of the explosive and the eventual sinking of the ship.

Chatterton v Lancashire And Yorkshire Accent Insurance 1909 The insured who had a personal accident insurance policy, excluding death as a result of any disease, died of pneumonia as a result of falling from a horse on a wet ground, the court ruled that the direct cause was "the accident of the fall, not the illness (i.e., the chain of events has been interrupted).

Marsdorf v. Exdent Insurance Company 1903 The insured injured his leg with his thumb nail while taking off his socks, resulting in the wound rotting after 6 days and septicaemia 10 days later and died of pneumonia. The court ruled that the direct cause of death was accident, not illness.

The insured is liable for the loss if the chain of events begins directly from a locked, and irresponsible risk if it begins as a direct result of an excluded risk. The 1908 case "Total Broadhurst Lee v. London and Lancashire Fire Insurance Company" caused an earthquake in the heart of an oil-powered stove, which led to a fire in the house and the fire moved from one building to another due to thermal radiation until the fire reached the house in sured's place. The court ruled that the loss was excluded from the document because the fire was caused by the earthquake and that the chain of events between this excluded risk and the loss remained unbroken.

The chain of events is connected if each event has occurred as a natural result of the previous event and if the chain of events is interrupted by a new cause intervention, it becomes different. The case of "Marswin v. City Andconti Insurance" 1865 caused a fire in a crowd around the shop and they smashed the glass when some riots broke out and some people took advantage of this situation and robbed the shop and the document in question covered the break of glass otherwise resulting from the fire. The court said that the actions of these persons were not a natural result of the fire and therefore the chain of events was interrupted and therefore the direct cause of the broken glass is a riot and not a fire and therefore the insured must be compensated for this loss.

Winnikovsky v. Armi & Neve Insurance 1919, when thieves took advantage of the opportunity to turn off the lights during an air attack during the war and stole some secure goods from the insured building. The court ruled that theft, a risk secured under the policy, was the direct cause, not the air attack excluded from the policy.

Lawness v. Oxdental Insurance 1881, accident insurance policy covering accidental accident death with the exception of death as a result of seizures. The believer suffered a seizure while standing on a railway platform and was run over by the train. The court said the immediate cause of death was the run over the train, not the shift.

Adjustments to the principle of direct cause

The principle of direct cause can be amended or excluded by modifying the text of the document and if the risks of war are categorically excluded, any claim is rejected if that risk involves causing the loss even remotely. Companies provide the exception of losses directly or indirectly from the risk in question. Cox v. Amplore Insurance Ltd. 1916 The insured died when he was hit by a train while inspecting railway guards in the dark after the lights were turned off during the war, the court ruled that the insurer was not responsible for this loss because the document excludes the dangers of war whether it contributes to the losses directly or indirectly and although the war contributed significantly to the accident, the addition of the previous paragraph had the effective effect of expanding the extent of the exception and reducing the size of the coverage.

The 1982 case "Oi v. Foster" ignited an oil that was left on an electric oven and the fire moved into the house after the wife of the insured left the rented house, and since the wife is legally liable for the damages because of her negligence and claimed the insurance company under the personal liability section of the home insurance policy owned by the husband, the document excludes personal liability that arises directly or indirectly from the ownership or residence of any property. The court ruled that the direct cause of the fire was the wife's failure to turn off the oven before leaving the house and that the loss arose even indirectly due to the residence in the house in question and therefore the insured was not responsible for the loss.

The case of "Donholm v. Bentley" 1996 when Mrs. Bentley parked her car on the street because there was no gasoline in the car and 10 minutes later one of her colleagues stopped on the other side and cut off the street to go to him and brought some gasoline but she was hit by a speeding car and she died and the driver of the car was seriously injured (Denholm) and filed a lawsuit against the heirs of the deceased because of her negligence and indifference when cutting the street and demanded that the insurance company insured her car pay the value of the claim, the insurance company refused to pay the claim on the basis that the claim was made on the basis of the claim The insured stopped the car in the right place and after 10 minutes she cut off the street i.e. that the accident did not occur due to the use of the car the court accepted the view of the believer but ruled that the accident arose from the use of the car and therefore the believer is responsible for this loss (amendment here to expand the cover range and not to narrow it)

The burden of proof:

The insured must prove that the direct cause of the loss is a risk insured, and if the insured wishes to reject the claim, he must prove that the direct cause of the loss was an excluded risk from the document, or he may amend the text of the document so that the insured has to prove that the direct cause is not an excluded risk.

To further increase, I invite the reader to read the reference: The Insurance Law Book issued by the British Legal Insurance Institute