Proximate Cause in Insurance

The Supreme Court has sided with a homeowner whose insurance claim for a flooded basement was rejected. The insurance company denied the claim, blaming "seepage" (a slow leak) instead of "flooding" from heavy rain, which was covered by the policy. The company based its decision on a second, delayed inspection report. The Supreme Court found this unacceptable, noting that the first, immediate report had clearly identified flooding from heavy rain as the cause. The Court called the second report arbitrary and unreliable, set aside the rejection, and sent the case back to the National Consumer Commission to calculate the compensation owed.