January/February 2023 Volume 34, Number 1 | |||||
What Does “Proximate Cause” Mean in Insurance?How does it apply in a case involving the ransomware payment from a cryptocurrency account?
Proximate cause, which refers to the closest/first cause of an accident, is a basic principle of insurance. Although there are several classic examples of how proximate cause works, a case involving cryptocurrency was recently decided based on the principle of proximate cause. Fire Insurance It’s often necessary to identify the proximate cause if the loss can be attributed to more than one cause. Let’s assume there’s a warehouse fire that occurred shortly after an earthquake. Investigators determine that the reason for the fire was the damage caused by shocks from the earthquake to the electrical meter on the premises. Most property insurance policies specifically exclude the peril of earthquake, and since it’s the proximate cause of the fire, there would be no coverage for the fire under the warehouse’s property policy. Accident Insurance Another classic example of proximate cause involves accident insurance. Let’s say a man who owns a simple accident policy is walking down the street and gets hit by a car. Of course, the man’s injuries were caused the car that hit him. But was the car the proximate cause? What if it turned out that the man had suffered a heart attack just before the car drove by and the man fell into the road and was then struck by the car? His heart attack would be the proximate cause of his loss. Depending on how limited his accident insurance policy was written his claim may be denied. Cryptocurrency
Now let’s look at the cryptocurrency case.
A federal district court in Portland, Oregon, has ruled that Yoshida Foods International, a beverages and sauces manufacturer, is entitled to reimbursement for the ransom its president paid from his own cryptocurrency account. |
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8 Winter Driving Tips for Commercial and Personal Vehicle Drivers What Does “Proximate Cause” Mean in Insurance? Why You Need Equipment Breakdown Coverage What Do Equipment Breakdown Policies Cover?
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