Auto-Owners Ins. Co. v. Long,
2018 WL 5575178 (Ind. Ct. App. 2018)
Commercial general liability (“CGL”) policies provide coverage for property damage and bodily injury caused by an “occurrence” (an accident), and the available limit of coverage is usually tied to the number of “occurrences.” Because the number of “occurrences” can affect, among other things, the amount of insurance coverage available, it comes as no surprise that disputes often arise over the number of “occurrences” that may trigger coverage. The Indiana Court of Appeals recently reiterated its acceptance of the “cause theory,” which provides “the number of occurrences is determined by referring to the cause or causes of the damages.”
In Long, a company mailed ten bottles of a product containing toxic chemicals in a box that had no hazardous-substances warning label. While being processed at a mail sorting facility, the box, which was sealed with just one piece of masking tape, broke open and the bottles leaked toxic fumes. A postal service employee tried to clean up the spill, but the fumes overwhelmed and injured him. Several years later, the employee died, and his estate sued the company for failing to label and package the box properly.
The company’s CGL policy provided $1 million of liability coverage per “occurrence,” which the policy defined as “an accident, including the continuous or repeated exposure to substantially the same general harmful conditions.” The employee’s estate argued that the available limit of coverage was $2 million because there were two “occurrences” – the company’s failure to label the box properly and the company’s failure to seal the box properly. The Court of Appeals disagreed and found there was only one “occurrence,” because even though the company “did two things wrong in shipping the package, the wrongdoing resulted in one spill, i.e., one proximate, uninterrupted, and continuing cause which resulted in [the employee’s] injury.” (internal quotation marks omitted). Thus, the available limit of coverage under the company’s CGL policy was $1 million.
Determining the number of “occurrences” is a fact-specific inquiry that will not always be as straightforward as it was in Long, but insurers and insureds should not overlook its importance because an increase in the number of “occurrences” will not always help the insured. While an increase in the number of “occurrences” may increase the amount of potential coverage under the CGL policy (subject to any aggregate limit), it may also increase the number of self-insured retentions that the insured must pay before the insurer owes anything under the CGL policy. Whether this helps or hurts the insurer or the insured depends on the facts, the CGL policy, and the damages sought, so neither should assume that more “occurrences” equals more coverage.
