Critical Analysis in the Claims Handling Process - One or Multiple Occurrences?

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An issue that often arises when an insurer is determining whether a policy provides coverage for bodily injury or property damage under a liability policy is the number of occurrences that may be triggered under the policy. Occurrence-based liability policies usually contain a “per occurrence” limit. While some policies also contain a general aggregate limit, others do not. Typically, liability policies define an “occurrence” as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The number of occurrences triggered by an accident is therefore the subject of consternation during the claims handling process.

The Florida seminal case addressing the number of occurrences is Koikos v. Travelers Insurance Co., 849 So. 2d 263, 265 (Fla. 2003). In Koikos, two gunshot victims sued Mr. Koikos alleging negligent security following a shooting that occurred at his restaurant. Mr. Koikos’ insurance carrier, Travelers Insurance Company (“Travelers”), argued that Mr. Koikos’ alleged negligence constituted a single occurrence under the terms of the policy, but Mr. Koikos argued that each shot that injured a separate claimant was a separate occurrence.

Mr. Koikos brought a declaratory judgment action against Travelers to decide the issue. Mr. Koikos argued that two occurrences existed because two shootings occurred causing separate injuries to two people. Conversely, Travelers argued that the occurrence was Mr. Koikos’ negligence (negligent security), and thus, only one occurrence existed as defined by the policy.

When analyzing the number of occurrences in that case, the Florida Supreme Court stated it embraced the “cause theory,” which looks to the cause of the injuries, rather than the “effect theory,” that analyzes the number of injured claimants. Moving a step further, the Court agreed with Mr. Koikos’ argument that the shooting constituted multiple occurrences and explained:

It is the act that causes the damage, which is neither expected or intended from the standpoint of the insured, that constitutes the “occurrence.” The insured’s alleged negligence is the basis upon which the insured is being sued by the injured party. Focusing on the immediate cause–that is the act that causes the damage–rather than the underlying tort–that is the insured’s negligence–is also consistent with the interpretation of other forms of insurance policies.

The Court also analyzed the “continuous or repeated exposure” language in the definition of occurrence and held that it was intended to broaden coverage, not restrict it. The Court explained that other jurisdictions held that this language “was intended to apply to ongoing exposure to harmful environment phenomena, and not an insured’s tortious omission.” Additionally, the Court explained that this language addresses ongoing and slowly developing injuries, including those in toxic torts. Because two individuals were shot with two separate bullets, even though by one shooter with a single gun, “with sufficient time between the shootings,” the Court held that two occurrences existed. The result was reached even though only seconds elapsed between the shootings. In reaching this result, the court emphasized that “that””‘occurrence’ is defined by the immediate injury-producing act and not by the underlying tortious omission.” (Emphasis added.)

A prior case relied upon by the Florida Supreme Court was American Indemnity Company v. McQuaig, 435 So. 2d 414 (Fla. 5th DCA 1983). In McQuaig, a perpetrator fired three shots with the first shot striking a police officer, Officer Pope. Approximately one minute later, the perpetrator fired his shotgun again and struck Officer Pope and another officer, Officer McQuaig. Approximately forty-five seconds to one minute later, the perpetrator fired his weapon again and yet another bullet struck Officer McQuaig.

The perpetrator’s homeowners’ policy with American Indemnity Company (“American”) provided liability coverage of $100,000 per occurrence. Officer Pope made a claim and American paid him the entire policy limits to settle his claim. The McQuaigs then filed a declaratory judgment action seeking a determination regarding whether American’s policy was exhausted or whether each gunshot constituted a separate occurrence.

The court noted that Florida uses the cause theory to determine the number of occurrences. American argued that only one occurrence existed because the injuries were caused by one instrumentality, the gun, and they happened in one specific location over a very brief period of time. The court disagreed, while distinguishing the cases cited by American to support its position, and explained:

In each of these cases, however, there was a single force, that once set in motion caused multiple injuries. Analogous to this would be if a single shot had injured both McQuaig and Pope. This was not the case. A shot was fired and Pope was injured. There was a time interval of approximately two minutes before another shot was fired which inflicted most of McQuaig’s injuries. … Under the cause theory, there was not “one proximate, uninterrupted, and continuous cause which resulted in the injuries and damages” but rather three separate causes.

Recently, a Florida District Court in Belt v. USAA Casualty Insurance Co., 2021 WL 926536 (Fla. 4th DCA 2021), analyzed the number of accidents in a multi-vehicle collision in the context of a UM policy. While the insured was driving on I-95, her vehicle was struck by a hit and run “phantom” vehicle, and it was then struck by an uninsured vehicle. She alleged that these were two separate accidents. She sought to recover under her uninsured motorist coverage from her automobile insurer, USAA. USAA argued that this incident constituted one accident because it was a continuous sequence of events. In Ms. Belt’s suit against USAA, conflicting testimony was presented regarding the timeframe between when her vehicle was struck by the two vehicles and whether she was in control of her vehicle between the incidents. At the charge conference, an issue arose surrounding a jury instruction asking the jury to determine whether the incident was one accident or two. The jury instruction stated:(Emphasis added.) Even though not discussed by the court, Officer Pope likely could not argue that his claim constituted two separate occurrences because presumably he signed a Release when accepting the $100,000 payment from American. Officer McQuaig presumably received $200,000 based on two occurrences.

The first issue you are asked to answer is whether or not the two impacts amounted to one or two accidents. Multiple impacts will be considered one accident if there is but one proximate, uninterrupted, and continuing cause of injury.

In answering that question, you must consider the following factors: The time between each impact, the space or distance between each impact and whether plaintiff regained control of her vehicle before the second impact.

If you find that both impacts amounted to one accident, you will be done and need not decide any other issue.

If you find that both impacts amounted to two accidents, you will have to decide whether [the uninsured motorist] was negligent in the operation of his motor vehicle, and if so, whether that negligence was a contributing legal cause to plaintiff’s injuries.

The first question on the verdict form asked:

  1. Was the impact between [appellant] and [the uninsured motorist] a separate distinct second accident?

The Fourth District Court of Appeal looked to Koikos and a Georgia court case, State Auto Property & Casualty Co. v. Matty, 286 Ga. 611, 690 S.E.2d 614 (Ga. 2010), to help make its decision. In Matty, which involved a vehicle striking a bicyclist and then a second bicyclist within 1-2 seconds of each other, the court used the “cause theory” and explained:After the jury found that the incident involved two separate accidents, USAA appealed challenging the jury instruction.

Under this theory, the number of accidents is determined by the number of causes of the injuries, with the court asking if “[t]here was but one proximate, uninterrupted, and continuing cause which resulted in all of the injuries and damage.’” Appalachian [Ins. Co. v. Liberty Mut. Ins. Co.], 676 F.2d [56] at 61 [(3d Cir. 1982)] (citations omitted). In the context of vehicle accidents involving multiple collisions that do not occur simultaneously (recognizing that it is almost impossible that such collisions can occur without any difference in time and place), courts look to whether, after the cause of the initial collision, the driver regained control of the vehicle before a subsequent collision, so that it can be said there was a second intervening cause and therefore a second accident.

(Emphasis in original.) The Florida court held that the jury instruction was proper and the jury’s decision that two accidents and not one occurred would not be disturbed.

Prior to Belt, Florida state courts applied the cause theory to third-party liability claims. Belt was the first case that applied this theory in the context of an uninsured/underinsured motorist claim. (Emphasis in original.) The Florida court held that the jury instruction was proper and the jury’s decision that two accidents and not one occurred would not be disturbed.

How can these cases be helpful when determining the number of occurrences or accidents? First, it is clear that Florida uses the “cause theory” when determining the number of occurrences or accidents. This means that a court will look to the cause of the injuries when analyzing the number of occurrences. Second, if multiple incidents occur that are separated in time and/or space, the incidents likely constitute more than one occurrence. However, if an accident is part of one continuous sequence of events with very little separation in time and location, it likely constitutes a single occurrence. For example, if an automobile strikes another automobile, which causes the tortfeasor’s automobile to strike a third automobile, this accident would likely constitute one occurrence. Third, the “continuous or repeated exposure” language in the definition of occurrence was held to broaden coverage, not restrict it, which is generally utilized in cases involving environmental damage or toxic torts. Determining the number of occurrences is vital to an insurer and insured when determining how much coverage is available to respond to a multiple claimant tort claim.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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