Sugar sent by ship was insured against sea hazards. Rats made hole by cutting the pipe of the toilet. Sea water entered through hole and the sugar was destroyed. Will the insurance company be liable for the risk in the given situation. Support your answer with valid reason.

Dear Student,

Yes. The insurance company will be liable for the risk in the given situation. This is because in the given case the loss is due to many complex causes. Thus, according the principle of proximate cause, insurance company will ascertain the nearest cause of the loss (i.e. sea water entered through hole and the sugar was destroyed) and the compensation willl be paid.

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