Presenting a live 110-minute webinar with interactive Q&A Number of Occurrences in Liability Claims Framing the Occurrence Issue to Maximize Policyholder's Coverage or Limit Insurer's Liability Exposure WEDNESDAY, NOVEMBER 7, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Jerold Oshinsky, Partner, Jenner & Block , Los Angeles John T . Harding, Partner, Morrison Mahoney , Boston The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-927-5568 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: Close the notification box • • In the chat box, type (1) your company name and (2) the number of attendees at your location • Click the SEND button beside the box
If you have not printed the conference materials for this program, please complete the following steps: Click on the + sign next to “Conference Materials” in the middle of the left - • hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. •
Number of Occurrences in Liability Claims Jerold Oshinsky Jenner & Block LLP 213.239.5156 joshinsky@jenner.com John T. Harding Morrison Mahoney LLP 617.439.7558 jharding@morrisonmahoney.com Strafford Seminars November 7, 2012 5
“Occurrences” • An unusual and tricky area of the law. • Not “is there coverage” but “how much?” • Small number of cases disguise the breadth of the problem across all lines of coverage. 6 6
“Occurrences” Cases Used To Be Rare • Requires unusual cluster of circumstances: – Insured must be liable – Policy must afford coverage – Case doesn’t settle – Liability must exceed conceded coverage • Insurers haven’t wanted to take a position. – No consistent “right” position that is always beneficial – If you are excess today you may be primary tomorrow 7 7
Why Is This Now Such An Important Issue? • Focus is increasingly on indemnity issues. – Erosion of underlying layers of coverage • Growing role of SIRS. • High profile disputes: WTC 8 8
Why This Issue Matters 9 9
Why Parties Have Avoided Litigating This Issue Until Now • There’s no one answer that’s “right” all the time. • Insureds Generally Want Multiple “Occurrences” – Maximize Limits – But Not If They Have SIRs – and Not If They Want To “Spike” Excess Layers • Insurers Generally Want One “Occurrence” – But Not If The Insured Has SIRs – And Not If They Are Excess Carriers 10 10
“Occurrence” Players • Dispute between insurer and policyholder. • Dispute between primary and excess insurers . • Dispute between insurer and reinsurer. 11 11
So What is an Occurrence? • Generally defined by the policy. • Frequently use the word “accident” to describe an “occurrence” – An “accident” is “an unexpected happening without intention or design . . . [and i]mplicit in the meaning of 'accident' is the lack of intentionality.” Sheehan Const. Co., Inc. v. Continental Cas. Co., 935 N.E.2d 160 (Ind. 2010). 12 12
Stonewall Ins. Co. v. Du Pont 996 A.2d 1254 (Del. 2010) • Very significant case illustrating the dilemmas for policyholders and insurers • Do “independent causes” = separate “occurrences”? • Significance of “premises locations” 13
MONEY NEVER SLEEPS • $50 million per occurrence SIR • Presents a $24 trillion dollar question • Is the coverage illusory? 14
Non-Cumulation Clause • Is it an alternative way to reduce exposure? • Can it be used to reduce insurer’s exposure to ZERO • What effect should policyholder’s shifting “trigger” have on application? 15
“Occurrences”: Determining Factors Policy Wordings The “Cause” Test External Factors 16 16
Dual Policy Role of “Occurrence” • “Occurrence” plays two separate roles in CGL or excess policy 1. Insuring Agreement – BI/PD must result from an “occurrence” – “Occurrence” is basis for insured’s liability 2. Limits of Liability – Exposure to similar conditions is one “occurrence” – “Occurrence” is cap on insurer’s liability 17 17
Don’t Confuse the “Occurrence” with the “Trigger” of Coverage “Occurrence” is not the trigger of coverage. “Occurrence” is the act of the insured (the accident, event or conditions) that results in injury. – Cause It is the resulting injury during the policy period that triggers coverage. – Effect 18 18
I. Policy Wordings • “Occurrence” Definitions – Standard CGL: “Conditions” – Non- Standard: “Happenings and Events” • Aggregates • Non-Cumulation and Deemer Clauses 19 19
“Exposure To Conditions” • “For the purpose of determining the company's liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence. ” 20 20
“Conditions” Refers to Cause of Injury, Not Basis for Liability • Koikos v. Travelers, 849 So.2d 263 (Fla. 2003) – Florida Supreme Court rejected Travelers’ argument that insured’s negligence was “conditions” : • “The ‘continuous or repeated exposure’ language does not restrict the definition of ‘occurrence’ but rather expands it by including ongoing and slowly developing injuries, such as those in the field of toxic torts … .The victims were not “exposed” to the negligent failure to provide security. If the victims were “exposed” to anything, it was the bullets fired from the intruder’s gun. ” 21 21
Aggregate Limits • Until recently, CGL policies did not have general aggregates • Aggregate protection limited to “Products” and “Completed Operations” Hazards – Generally inapplicable to pollution – Problematic for asbestos claims: Keasbey • Older Aggregate Wordings – “Each premises location” 22 22
Non-Cumulation Clauses • “It is agreed that if any loss covered hereunder is also covered in whole or in part under any other excess policy issued to the Insured prior to the inception date hereof, the limit of liability hereon as stated in II(b) shall be reduced by any amounts due to the Insured on account of such loss under such prior insurance.” 23 23
Non-Cumulation Clauses • Clause intended to prevent “stacking”. • Only applies if loss from one “occurrence.” • Most commonly upheld in “all sums” states, – Liberty Mutual v. Treesdale , 418 F.3d 330 ( 3d Cir. 2005) • Courts in “allocation” states less willing to enforce. – Spaulding v. Aetna , 819 A.2d 410 (N.J 2003) • Insurer can’t use clause to reduce its allocable share further. – But see: Hiraldo v. Allstate, 825 N.E.2d 133 (NY 2005) • Insurer only owed one limit for lead paint. 24 24
Multi-Year Policies: Annualization and “Stub” Policies • Three Year Policy: Three limits or One? – Impact of “annualization” language – Occurrence limit applies to policy as a whole but “aggregate” applies to each annual period. • Stub Policies – Where one year policy is renewed for a few months more, should an additional limit apply? – Answer often depends on the underwriting intent. 25 25
Case Example • California Ins. Co. v. Stimson Lumber Co., 2004 WL 1173185 (D. Or. May 26, 2004) – Manufacturer sued for defects in exterior hardwood siding product – National Union excess policies had “prior insurance non - cumulation of liability” provision stating that if a “loss” covered under the policy was also covered in whole or in part under any earlier excess policy, the amounts due would be reduced by the amounts owed to the insured under that prior insurance. – Court rejected insured’s argument that “loss” referred only to each individual siding claim paid by Stimson and therefore should not reduce its claims in the aggregate. – “To the extent that there is any excess insurance coverage available for the siding loss, the non- cumulation provision applies to reduce National Union’s policy limits by the amounts paid in prior policy years as amounts paid by other excess settling insurers.” 26 26
Recommend
More recommend
