The term proximate cause refers to the nearest cause leading to the loss. It is the direct cause of a loss event. The principle of proximate cause is the cause that is primary to the occurred event. It could also be the most significant incident which cascades into the loss event.
The insurer will entertain the claim only if this significant cause is close enough to the loss.
The principle of ‘Causa Proxima’ or simply proximate cause is vital in insurance when there is more than one event taking place simultaneously. The principle helps in determining whether the insurer should cover the loss or not.
When you buy a life insurance, you are covered for some specific events. No insurance covers all the risks.
So when a loss occurs, it can multiply due to secondary events. Your insurance policy will pay for only those losses which occur due to the covered events and not the others. If that main cause is covered under the insurance, only then you are allowed to claim for damages. Thus to get the claim your policy must cover the proximate cause of the loss.
Note that it is not necessary for the event that took place just before the loss to be considered as the proximate cause.