The number of decisions, addressing “number of occurrences,” under a general liability policy, are staggering. In the past month or so alone there were at least five and they addressed a multitude of scenarios: injuries and damages caused by fireworks, defective windows, sexual abuse, tabletop torches and construction defects.
What makes the situation particularly interesting is that most states have adopted a test for determining if multiple injuries or damages were caused by one occurrence or multiple – usually the “cause” test or the “effect” test (or something along those lines). Under the “cause” test, number of occurrences is determined by examining the cause or causes of the damage. Under the “effect” test, number of occurrences is determined by examining the effect that an event had, i.e., how many individual claims or injuries resulted from it. The “cause” test is the majority rule nationwide.
That so much litigation takes place, to determine number of occurrences, even after the appropriate test has been established, can likely be explained by a combination of the tests being imprecise and the claims being fact-driven.
The significance of number of occurrences can be monumental. It can double, triple or more, the limits of liability at issue. Should an issue this significant, and that arises with such frequency, be subject to so much uncertainty?
The policy language that drives number of occurrences is this. Most commercial general liability policy’s Limits of Liability section state that the policy’s Each Occurrence Limit is the most that the insurer will pay for the sum of damages because of all “bodily injury” and “property damage” arising out of any one “occurrence.” Then, most policies define “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
This isn’t much and it’s general. Is it time for insurers to revisit their policy language to add further explanation of how to count occurrences, thereby possibly reducing litigation over the issue?
For example, claims made policies have a similar issue – number of claims. These policies often define the term “claim” in an effort to address the issue. For example, “Two or more ‘claims’ for, arising out of, in consequence of, in connection with or in any way involving or resulting from a single ‘wrongful act’ or series of related ‘wrongful acts’ shall be a single ‘claim.’ A series of related ‘wrongful acts’ are those that arise out of, are based on, relate to or are in consequence of the same facts, circumstances or situations.” Having said that, there is still plenty of litigation over the number of claims issue.
I’m not advocating one way or another whether insurers should add further language addressing number of occurrences. I haven’t studied the issue enough to have reached a conclusion. But I wonder about it when I see the frequent number of occurrences decisions, with so many having significant consequences.