Property insurance pays only when the proximate cause of the loss is a covered peril.
- The proximate cause is the dominant, effective cause that sets the chain of events in motion, not necessarily the first or the last event. An unbroken causal chain matters: lightning strikes a tree, the tree falls on a house, the house catches fire, proximate cause is lightning (or fire, depending on policy wording).
- Named-perils (or specified-perils) coverage responds only to perils expressly listed in the policy (e.g., fire, lightning, windstorm, hail, explosion, smoke, vandalism, theft). The burden is on the insured to show the loss falls within a listed peril.
- All-risk (sometimes called "open-perils" or "comprehensive") coverage responds to any physical loss except those expressly excluded in the policy. The burden of proof shifts: the insured shows a loss occurred; the insurer must prove the loss was caused by an exclusion.
An important Ontario rule on fire following an excluded cause: many Ontario property forms include an "ensuing fire" provision. If an excluded peril (earthquake, war) causes a fire and the fire causes further damage, the fire damage is still covered. This is anchored in the statutory conditions schedule and is heavily tested.
Common mistake: thinking "all-risk" means "everything is covered". It does not. Every all-risk policy has exclusions (wear and tear, gradual deterioration, intentional acts, certain water perils). All-risk shifts the burden of proof; it does not eliminate the exclusions.
🧠 Memory hook, "Named: listed in. All-risk: listed out.": named perils are coverage by inclusion; all-risk is coverage by exclusion.
Recall: Who bears the burden of proving the cause of loss under an all-risk policy? What does "ensuing fire" coverage do when the original peril is excluded?