Insurers must determine if the cause of loss or damage is covered by the insurance policy, this is referred to as Proximate Cause. Insurance policies cover specified perils and benefits. Also they are subject to conditions (which are rules that insurers expect Customers to follow in order for policy cover to apply); and exclusions (circumstances under which cover does not apply).
When considering the cause of loss or damage the insurer is concerned with the Proximate Cause. In many cases this will be obvious. For example, I once struck a gatepost while reversing my car into a driveway. The damage to my car was caused accidentally by me. Allianz (my insurer) paid to have my car repaired as I had Comprehensive cover.
In a lot of cases however the Proximate Cause of a loss event is not initially obvious. For example, water damage to a home caused by water entering the property through a damaged roof. A major consideration for the insurer will be the cause of damage to the roof. If the damage was caused during a storm (perhaps by high winds removing tiles) then it is likely that the insurer will pay for repair of the roof and interior of the home as a storm damage claim.
If however the insurer finds that there was no significant weather event that could have caused damage to the roof, that the roof is in a poor state of repair and there is evidence that water damage to the property has developed over a period of time, then the insurer may conclude that damage to the interior is due to failure to adequately maintain the property. In these circumstances the insurer may refuse to deal with the claim on the basis that the cause of loss is not covered under the policy.
When buying any insurance product it is important to fully understand what is covered and what’s not. This will be detailed in the product summary and policy document.