Definition of Occurrence Decided in Favor of Insurer
August 21, 2017
This week the United States Court of Appeals for the Sixth Circuit decided that the prior ruling of the district court in favor of the insurer was proper. The district court had entered a judgment declaring that the insurer's liability was limited to $1 million because the policy provided a maximum of $1 million of coverage “per occurrence” and the incident at issue was only one “occurrence”, despite severe injury to multiple people. The case is Evanston Ins. Co. v. Hous. Auth. of Somerset, No. 16-6691, 2017 U.S. App. Lexis 15199 (6th Cir. Aug. 15, 2017).
In 2009, an old tree broke low on its trunk and fell on Kaitlyn Griffin and Joshua Thacker, cousins. Kaitlyn was pregnant at the time and died within minutes of the accident. The doctors tried to save the baby, and delivered him, Nicholas Ayden Steele, but he died an hour after birth. Joshua survived but suffered serious physical injury. The families filed, and won, a state court lawsuit for almost $4 million against the Housing Authority of Somerset, the entity responsible for failing to maintain the area where the tree had been located. The Housing Authority belonged to the Kentucky Housing Authorities Self-Insurance Fund, who had a policy purchased through the Evanston Insurance Company. Evanston denied coverage for the judgment and then filed a complaint in federal court against the families, the Housing Authority, and the Fund with the goal of limiting it's liability to $1 million. The policy with Evanston Insurance Company came with a series of caps and conditions, described within the policy documentation.
The policy language is what is important in this case. The Fund self-insures for up to $150,000 to cover general liability claims against members of the Fund. Members of the Fund are covered for claims that exceed $150,000 through the Evanston policy. Part A of the policy insures Fund members for general liability stemming from “bodily injury, personal and advertising injury, or property damage caused by an occurrence that takes place in a coverage territory”. The policy limits coverage to $1,000,000 for each “occurrence” and $2,000,000 in the aggregate.
The families argued that since two individuals died and one was seriously injured, and they were hit by different branches there was more than one occurrence, and more than $1 million should be paid out. The families also argued that each victim had died from different reasons, one was a cardiac arrest, while the other was blunt force.
Evanston argued that although several people were injured in different ways when the tree fell, since it was only one tree falling because of one reason, it should be counted as only one occurrence.
The district court decided that Part A of the contract limited coverage to $1 million because the accident and injuries arose from one single occurrence, one tree falling because it was old. The three judge appeals panel unanimously agreed with the decision of the district court.
Editor's Note: The policy at hand described “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”. The breadth of the term “occurrence” has been debated and molded over the years. Whether an event counts as more than one “occurrence” is based on the specific events of each individual case. In the case at hand, despite the fact that the injured parties suffered different injuries, they were exposed to the same general conditions, that is, the aged tree falling.