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Reminder on the rules of causation
The University of Exeter v Allianz Insurance Plc [2023] reminds how the rules of causation operate in the context of insurance policies.
In April and May 1942, the German Luftwaffe carried out a series of aerial bombing attacks on various English cities. These are known as the “Baedeker raids”, named after the popular German Baedeker travel guides of the time which were used to identify targets of cultural and historical value. Of the hundreds of fallen bombs, one landed onto farmland on the outskirts of Exeter. It did not explode. Almost 80 years later, contractors unearthed the bomb while working on a construction site adjacent to the University of Exeter’s halls of residence. The bomb was detonated on location in a controlled manner and the explosion damaged various buildings owned by the University.
A video of the detonation is available online >
The insurance company, Allianz, declined to cover the damage on the basis that the University’s policy excluded liability for loss ‘occasioned by war’. Argument followed over what was the proximate cause of the loss. The University argued that the proximate cause of the loss was the deliberate act of the bomb disposal team in detonating the bomb. Allianz argued that the proximate cause, or at least a concurrent proximate cause, was the initial dropping of the bomb in 1942.
The Court then gave a helpful overview of the rules regarding causation. The usual rule is that an insurer is only liable for loss proximately caused by a peril covered by the policy. Proximate cause does not mean the last in time. It means that which is proximate in efficiency; what matters is the dominant, effective or efficient cause of the loss.
Where there are concurrent causes of a loss and they are equal, or at least nearly equal in their efficiency, and one of those causes is an insured peril, then it will be covered by the insurance policy. Where there are concurrent causes of approximately equal efficiency, and one is an insured peril and the other is excluded by the policy, the exclusion will usually prevail.
The Court of Appeal found that both the dropping of the bomb in 1942 and the controlled detonation nearly 80 years later were concurrent causes of the damage. It was the combination of these two events which made the loss inevitable. The passage of time had not reduced the potency of the bomb, and neither event would have caused the loss without the other. Therefore, the loss was held to be excluded under the policy.
This is a helpful reminder of how the rules of causation operate in the context of insurance policies. Members may need to keep this in mind when claiming losses under their cargo, war and hull policies, particularly where there are multiple causes of a loss.