Property and Casualty Insurance Practice Exam

What is meant by 'intervening cause'?

1. Actions that support the original chain of events

2. An independent action that breaks the chain of causation

3. The initial cause of a loss

4. A cause that has no impact on the insurance claim

The correct answer is: An independent action that breaks the chain of causation

An 'intervening cause' refers to an independent action or event that disrupts or breaks the original chain of causation leading to a loss. This concept is critical in property and casualty insurance because it helps determine liability and coverage. When an intervening cause occurs, it can serve as a new, distinct reason for the loss that alters how claims are assessed. For example, if a fire in a building was initially caused by a faulty electrical system (the original cause), but then a severe storm causes a tree branch to fall and create additional damage, that storm's action can be seen as an intervening cause. This could potentially influence whether the insurance policy covers the loss or how the claim is processed. The distinction of the intervening cause is significant in liability cases, as it can shift accountability and impact claim handling. Understanding this concept aids in comprehending how various events interact within the confines of an insurance policy and the circumstances surrounding a particular incident.