What is the Efficient Proximate Cause Doctrine? Why Public Adjusters and Policyholders Should Care

The efficient proximate cause doctrine is a legal principle used to determine which among multiple contributing factors to a loss is the most significant or “efficient” cause that should be considered when deciding insurance coverage. If the efficient cause is a covered peril under the policy terms, the insurer is typically required to cover the loss, even if other contributing causes are explicitly excluded by the policy. This principle helps in resolving disputes where a loss could be attributed to multiple causes, some covered by the policy and others not.

The interpretation of policy language is critical in applying the efficient proximate cause doctrine. Policies often define covered and excluded risks, but it is the interpretation and interaction of these definitions that determine the application of coverage in many loss scenarios. Policyholders and public adjusters must understand the specific language used in policies to anticipate how insurers might interpret claims involving multiple causes. Mastering and understanding how facts of loss lead to determinations of causation allow public adjusters and policyholders to better argue for coverage under the policy when multiple causes contribute to a loss.

The interpretation of what constitutes the “efficient” cause can vary significantly between jurisdictions and individual policy terms. This variability necessitates a keen understanding of how local courts and insurance bodies interpret and apply the doctrine. The specific wording used in policies can also lead to different interpretations of what constitutes an “efficient” cause, influencing the outcome of claims.

Different jurisdictions may interpret the efficient proximate cause in varied ways, which can affect how policies are written and understood. For example, some jurisdictions emphasize the first event in a chain of causation as the efficient cause, while others may consider the most significant or predominant event as the determining factor. Understanding these nuances is crucial for policyholders and their representatives to effectively navigate claims processing and dispute resolution.

An excellent law review article led to this post: The Efficient Proximate Cause Doctrine—What Is It, and Why Should I Care. 1 While describing the evolution and development of the doctrine, the author warns that “determining whether the efficient proximate cause is implicated can be challenging:”

The efficient proximate cause doctrine, originating in English common law, is rooted in the Latin phrase maxim ‘causa proxima, non remota spectator,’ widely interpreted to mean ‘the immediate not the remote cause is considered.’ Followed by a majority of jurisdictions today, the doctrine’s roots were recognized even in early insurance law cases. For example, an early case arising during the Civil War addressing the efficient proximate cause doctrine is Insurance Co. v. Boon. Boon sued to recover on a policy of insurance after goods and merchandise in his store were destroyed by fire. The insurer relied on a policy exclusion for fire damage resulting from ‘any invasion, insurrection, riot, or civil commotion, or of any military or usurped power.’ The exclusion was pertinent because the fire spread to the plaintiff’s premises following a Union Commander’s order that the local City Hall be burned to prevent access by the invading Confederate army to military goods stored there.

In regard to causation in Boon and the plaintiff’s ability to collect under the policy, the Court stated that, ‘the inquiry is, whether the rebel invasion or the usurping military force or power was the predominating and operative cause of the fire.’ Referencing the maxim ‘causa proxima, non remota spectator,’ the Court recognized incidental causes are not proximate or responsible ones and that ‘[t]he proximate cause is the efficient cause, the one that necessarily sets the other causes in operation.’ The Court in Boon went on to rule that the fire took place through the means of a military or usurped poser and that coverage was, therefore, foreclosed.

The efficient proximate cause doctrine, which comes into play only when one or more causative factors work together to cause a distinct loss, is not implicated when multiple perils occur at the same time but act independently to cause different losses. In that situation, the disputes involve evidentiary issues as to which occurrence caused which loss. Nor does the efficient proximate cause doctrine apply when only one peril causes a loss. As recognized in Chadwick v. Fire Insurance Exchange, the efficient proximate cause analysis is used only ‘where two or more distinct actions, events or forces combined to create the damage,’ and ‘[a]n insured may not avoid a contractual exclusion merely by affixing an additional label or separate characterization to the act or event causing the loss.’

Determining whether the efficient proximate cause is implicated can be challenging, and examples of the analysis used in specific situations are helpful….”

This blog has written numerous posts about the efficient proximate cause doctrine, providing examples of this important doctrine from various jurisdictions. For example, in 2009, I wrote Florida and Texas Courts Have a Slightly Different View of Insurance Causation Burdens of Proof: Part I, remarking:

“Since last May, just before we opened our Houston office, I have been reviewing and pondering causation and burdens of proof found in Texas insurance cases. While writing yesterday’s post regarding sinkhole coverage cases, I came across two Florida cases that demonstrate Florida’s view that policyholders truly have minimal proof requirements coverage under all-risk property insurance policies. Texas insurance case law does not follow this majority view. I will explain how they are different in two posts. Today will focus on Florida law. Tomorrow, I will provide Texas case examples and some practical suggestions so Texas policyholders do not get surprised at trial. I figure the insurance company adjusters and attorneys do not need any more help, so they get no suggestions.

Florida follows the nearly unanimous view that all-risk insurance policies provide very broad coverage and all that needs to be shown is a physical loss during the policy period. Indeed, some may suggest that the Florida cases only require a “physical loss” and, to deny coverage, the insurer must also prove the loss occurred outside the policy period. Florida sinkhole cases and broken pipe under structure cases highlight these causation issues.”

I then wrote, Causation Issues to Note in Texas Property Insurance Coverage Disputes-Part II, where I stated:

“When there are both covered and not covered causes of loss, the Texas approach is more akin to a comparative negligence state, where the jury determines and apportions how much is covered under the policy and how much is excluded. It may not be an all or nothing proposition, so, I probably should not say it is as unfair. But, when the rule is fully stated along with the burden of proof, most find Texas different because the burden placed on the policyholder is very different than in the majority of states.”

Of course, there have been numerous causation disputes in those states and throughout the country over the last fifteen years since I wrote those two articles. I intend to explore efficient proximate causation doctrine in a weekly post over the next several months. It is an extremely important doctrine that all public adjusters need to master if they want to be called an authentic “insurance coverage nerd” who can effectively and intelligently argue for coverage.

Thought For The Day

Dictionary, n.: A malevolent literary device for cramping the growth of a language and making it hard and inelastic.
—Ambrose Bierce

1 Vonda Mallicoat Laughlin, The Efficient Proximate Cause Doctrine-What Is It, and Why Should I Care?, 73 Baylor L. Rev. 311, 311 (2021).