One of the key issues in many insurance disputes is the number of “occurrences,” which are presented by a particular set of facts relating to a claim submitted by the policy holder. In its recent decision of Nat’l Liab. & Fire Ins. Co. v. Itzkowitz, the Second Circuit was called upon to determine whether the events surrounding an incident on the highway involving three separate vehicles were part of one single occurrence under New York law.
The events surrounding this coverage action were caused after a dump box became detached from a truck on a highway. Shortly thereafter, two separate vehicles collided with the dump box causing catastrophic results. The insurer argued that these events were part of one single occurrence, which was subject to a $1 million per-accident policy limit.
Using the asbestos litigation as a backdrop, the Second Circuit held that absent policy language which evidences intent to aggregate the incidents, the New York “unfortunate event test” applies. The language in this policy, providing that bodily injury or property damage resulting from continuous or repeated exposure to substantially the same conditions will be treated as one occurrence did not show a clear intent to aggregate the damage in this claim. The “unfortunate event” test was therefore applied by the court. This test involves identifying the operative incident giving rise to liability and then determining whether the incidents giving rise to the claims can be viewed as part of the same causal continuum, without any intervening agents or factors.
Although the parties disputed the exact chronology of the events at issue, the court held that under any view of the facts at issue, including one which minimizes the temporal gap between the impact of the detachment of the dump-box from the truck and the collision with the two vehicles, there were three separate incidents. The court found that each driver had theoretical ability to avoid the collision with the dump box and that there was a lack of continuum since each individual collision did not cause the subsequent collision.
The outcome of this case highlights that in order to evidence intent to aggregate incidents such as this, the policy language must be very clear as to this intent. The standard policy language providing that bodily injury or property damage resulting from continuous or repeated exposure to substantially the same conditions will be treated as one occurrence is not sufficient.