(Article from Insurance Law Alert, June 2018)
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An Arizona appellate court ruled that under applicable policy language an accident caused by several independent acts is a single occurrence. Cincinnati Indem. Co. v. Southwestern Line Constructors Joint Apprenticeship & Training Program, 2018 WL 2440627 (Ariz. App. May 31, 2018).
Two workers were injured when a utility pole broke while they were working on it. They sued the construction company and ultimately reached a settlement for the limits of the company’s liability policy. The policy contained a $1 million per-occurrence limit and a $2 million aggregate limit. The insurer sought a declaration that the employees’ injuries arose from a single occurrence and its obligation was therefore capped by the $1 million limit. An Arizona trial court agreed, and the appellate court affirmed.
The policy defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The appellate court ruled that there was only one occurrence because the injuries resulted from a single accident (i.e., the collapse of the utility pole). The employees argued that under Arizona law, the number of occurrences is determined by the number of allegedly negligent acts, and that here, at least five separate acts of negligence caused the pole to break, including the use of wooden poles, the failure to perform inspections and the lack of secondary support or supervision. The court rejected this assertion, explaining that a “negligent act” analysis is appropriate only where policy language defines “occurrence” in relation to incidents, acts or omissions that result in injury. Where, as here, occurrence is defined as an “accident” (rather than the precipitating cause of the accident), the number of antecedent negligent acts is irrelevant.