Why is the effective proximate cause doctrine important in insurance?

The effective proximate cause doctrine is significant in insurance because it helps establish the primary cause of a loss when multiple causes may be involved. This doctrine asserts that when a loss arises from multiple perils, the determining factor is the proximate cause—the cause that sets everything in motion. If the proximate cause is covered by the insurance policy, then the loss is typically covered, regardless of any other contributing causes that may not be covered.

This concept is vital in situations where, for example, a loss may occur due to a combination of fire and water damage; if the fire is deemed the effective proximate cause, and the policy covers fire damage, then the insurer may be responsible for compensating the loss. In this way, it plays a crucial role in guiding coverage decisions and helps maintain clarity and fairness in evaluating claims.