Proximate Causation in Insurance Law
| Author | Philip Rawlings,John Lowry |
| DOI | http://doi.org/10.1111/j.1468-2230.2005.00539.x |
| Date | 01 March 2005 |
| Published date | 01 March 2005 |
CASE
Proximate Causation in Insurance Law
John Lowry and Philip Rawlings
n
INTRODUCTION
The recent decision in Midland Mainline vEagle Star Insurance Co Ltd,
1
has returned
the Court of Appeal to some thorny questions concerning causation in insurance
contracts. The case resulted from the Hat¢eld rail disaster in 2000 in which four
people died when a trainwas derailed by a broken track. Following the crash, Rail-
track plc, the operator of the track, decided to impose emergency speed restrictions
(ESRs) across those parts of the rail networkwhere there was a possibility of a simi-
lar incident.This led to disruptions in trains and as a consequence rail companies
su¡ered losses. These companies sought to recover the loss es frompolicies covering
business interruption. The policy before the court excluded liability for loss caused
by ‘inherent vice, latent defect, gradual deterioration, wear and tear, frost, change in
water tablelevel, its own faulty ordefective design or materials’.The i nsurersde nied
liability for the companies’ losses on the ground that the cause of the loss was wear
and tearof the track andthat, since this was excluded, they were not liable.
THE PROXIMATECAUSE RULE
Causation in insurance law is s imple enough to describe and to justify, but some-
times rather di⁄cult to apply.
2
Clearly, the insured should only be able to claim
for those losses that fall within the terms of the policy, or, in other words, the loss
must have been caused by a peril which the insurers had agreed to cover. It is,
therefore, important to determine the cause of the loss. In a decision on this issue
involving the loss ofa vessel, Blackburn J highlighted the di⁄culties this entailed:
The ship perished because she wentashore on the coast of Yorkshire.Thecause of her
going ashore was partly that it was thick weather and she was making for Hull in
distress,and partly that she was unmanageable because full of water.The cause of that
cause, viz.,her being in distress and full of water, was, thatwhen she laboured in the
rollingsea she madewater; and thecause of hermaking water was,thatwhen she left
London she was not in so strong and staunch a state a ss he ought to have been.
3
n
Faculty of Laws, UniversityCol lege London.
1 [2004] EWCACiv 1042.
2 MA Clarke,‘Insurance:The ProximateCause in Engli sh Law’ [1981] CLJ 284.
3DudgeonvPem broke (1874) LR 9 QB 581, at 595. See also, LawrencevAccidentalInsuranceCo Ltd (18 81)
7 QBD 216,221 per WatkinWilliams J.
rThe Modern LawReview Limited 2005
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2005) 68(2)MLR 310^319
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