(Article from Insurance Law Alert, November 2018)
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Reversing an appellate court decision, the Wisconsin Supreme Court ruled that a fire that lasted three days and damaged multiple properties constituted a single occurrence under a general liability policy, subject to a single per-occurrence limit. Secura Ins. v. Lyme St. Croix Forest Co., LLC, 2018 WI 103 (Oct. 30, 2018).
The coverage dispute arose out of a forest fire that lasted three days and burned over 7,000 acres of land belonging to numerous individuals and businesses. The fire allegedly began in logging equipment owned by Duerr Logging. Secura Insurance, Duerr’s general liability insurer, sought a declaration that the fire was a single occurrence subject to the policy’s $500,000 per-occurrence limit. A Wisconsin circuit court rejected Secura’s argument, holding that “each ‘seepage’ of the fire onto another’s property constitute[d] a separate occurrence” and thus that the policy’s $2 million aggregate limit applied. An intermediate court of appeals affirmed, finding that there was a separate occurrence each time the fire spread to a new piece of real property. The Wisconsin Supreme Court reversed.
Applying a cause theory under which there is one occurrence when “a single, uninterrupted cause results in all of the injuries and damage,” the Wisconsin Supreme Court concluded that all of the fire-related damage arose from a single occurrence. The court explained that the fire burned continuously for three uninterrupted days and was caused by a single precipitating event. Additionally, the court noted that in focusing on the number of real properties damaged, the appellate and circuit court mistakenly applied an effects-oriented analysis, which has been rejected under Wisconsin law.
An Indiana appellate court also recently applied a cause-based approach to find one occurrence subject to a single per-occurrence policy limit. Auto-Owners Ins. Co. v. Long, 2018 WL 5575178 (Ind. App. Ct. Oct. 30, 2018). Reversing a trial court decision, the appellate court ruled that bodily injuries caused by exposure to toxic fumes emanating from a postal package arose from a single occurrence. The appellate court reasoned that although the policyholder committed two wrongdoings (failing to properly package and label the box in accordance with postal regulations), the injuries arose from “one proximate, uninterrupted, and continuing cause.”