(Article from Insurance Law Alert, October 2015)
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Applying New York’s “unfortunate event test,” the Second Circuit held that a series of related automobile accidents within a short time span constituted three separate “accidents” for purposes of policy coverage. Nat’l Liab. & Fire Ins. Co. v. Itzkowitz, 2015 WL 5332109 (2d Cir. Sept. 15, 2015), as amended (Sept. 22, 2015).
The relevant sequence of events began when a dump box attached to the back of a truck hit and damaged a highway overpass. After hitting the overpass, the dump box separated from the truck and landed on the highway. Between thirty seconds and five minutes later, a vehicle struck the detached box. At some point between a few seconds and twenty minutes thereafter, a second vehicle struck the box. The parties involved in the incident argued that this series of events constituted three separate “accidents” under the policy, whereas National Liability advocated a one-occurrence position. A New York federal district court ruled in favor of the drivers, and the Second Circuit affirmed.
Absent policy language indicating an intent to aggregate separate incidents into a single occurrence (as the court noted, “accident” and “occurrence” are used interchangeably in this context), New York law follows the unfortunate event test to determine how many occurrences exist for coverage purposes. The unfortunate event test focuses on (1) the “operative incident” giving rise to liability, and (2) “whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors.” Here, as a preliminary matter, the court rejected National Liability’s contention that the policy language at issue (providing that all injury and damage “resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one ‘accident’”) evidenced an intent to aggregate separate accidents into a single, unified occurrence. Applying the unfortunate event test, the court concluded that the incidents constituted three separate accidents. The court reasoned that each collision was a “separate operative incident” and that “although the incidents occurred close in time, nothing suggests that the narrow timespan between each incident played a role in causing any of the other incidents.” The court further explained that although the incidents shared a common origin (the dump truck’s collision with the overpass), the events were not part of the “same unbroken continuum.”
Notably, court declined to “draw a hard line at any particular number of seconds or minutes that must elapse before two incidents are distinct accidents.” Rather, court emphasized that courts must employ “‘common sense’ balancing” in applying the unfortunate event test.