What is the primary cause of loss that would typically be insured?

The primary cause of loss that is typically insured is known as the proximate cause. This concept refers to the most immediate and direct cause of a loss or damage that leads to the triggering of an insurance claim. Understanding the proximate cause is essential because it establishes a clear link between the event and the resulting loss, allowing insurers to assess their liability accurately.

For example, if a fire causes substantial damage to a building, the proximate cause of the loss is the fire itself. Insurers can then evaluate whether the loss falls within the policy coverage parameters based on the circumstances surrounding the proximate cause.

In contrast, a direct cause might refer to an event that leads to loss, but could lack the contextual relationship needed to validate an insurance claim. Remote risks fall outside the scope of typical insurance coverage because they are less predictable and have a diluted connection to a specific event leading to a loss. Speculative risk pertains to chances of gain or loss that are not insurable, such as investing in stock, which does not fit the framework of insurable risks. Thus, proximate cause is crucial in determining the legitimacy of an insurance claim related to a loss.