The California Department of Insurance published a bulletin reminding insurers of the efficient proximate cause doctrine and its relevance to losses caused by the recent wildfires.

The efficient proximate cause doctrine states that when a loss is caused by a combination of a covered and an excluded risk, the loss is covered if the covered risk is the efficient proximate cause. However, the loss is not covered if the covered risk was just a remote cause or if the excluded risk was the efficient proximate cause.

The California Supreme Court has ruled that the efficient proximate cause doctrine is the “preferred method for resolving first party insurance disputes involving losses caused by multiple risks or perils.”