Manufacturers Mutual Fire Insurance Company v. Royal Indemnity Company

It is a fundamental principle of insurance law, now fixed by California statute, that an insurer cannot be held liable unless the insured’s loss is proximately caused by the peril or hazard insured against. California Code of Insurance § 530. Here, however, the majority ignores this principle in order to hold Royal Indemnity (hereinafter Royal) liable for the hypothetical damages of a hazard which occurred but was not the cause of any loss to the insured.

Royal and Manufacturers Mutual (hereinafter Manufacturers) both insured Kaiser against loss of profits caused by on-premises physical…