What does "proximate cause" mean in insurance?

Proximate cause in insurance refers to the immediate cause of a loss, particularly in terms of whether that loss is covered under a specific insurance policy. The term emphasizes the necessity that for a claim to be valid, the cause of the loss must be linked to a peril that is explicitly covered in the policy. This concept is essential because it establishes the connection between the cause of the loss and the insurer's obligation to compensate the insured.

When a loss occurs, the insurer will assess whether the proximate cause aligns with the perils listed in the policy. For instance, if a fire damages property, and that fire is a covered peril in the insurance contract, then the loss is deemed to have a proximate cause that is insurable. This principle ensures that the coverage applies only to losses that directly result from incidents specified within the policy.