On February 11, 2016, New York’s highest court held in Selective Ins. Co. of Am. v. Cnty. of Rensselaer, 2016 N.Y. Slip Op. 01001 (2016) that, in a class action alleging improper strip searches of arrestees over a four-year period, each improper strip search was a separate occurrence under the policies at issue, mandating a separate deductible per strip search. Significantly, although the issue in this case concerned application of per-occurrence deductibles, the same reasoning would apply if the issue had been over the number of applicable policy limits.

Selective insured the County of Rensselaer (the “County”) under four consecutive occurrence-based policies. Each policy was subject to a deductible per occurrence, which the policy defined as:

“an event, including continuous or repeated exposure to substantially the same general harmful conditions, which results in … ‘personal injury’ … by any person or organization and arising out of the insured’s law enforcement duties. All claims arising out of (a) a riot or insurrection, (b) a civil disturbance resulting in an official proclamation of a state of emergency, (c) a temporary curfew, or (d) martial law are agreed to constitute one ‘occurrence.’”

The court held “[t]he plain language of the insurance policy indicates that the improper strip searches of the arrestees over a four-year period constitute separate occurrences under the policies at issue.” The court focused on the “by any person” language, determining that this “makes clear that [the policy] covers personal injuries to an individual person as a result of a harmful condition. The definition does not permit the grouping of multiple individuals who were harmed by the same condition, unless that group is an organization, which is clearly not the case here.” The court held, however, that the class’s attorneys’ fees should be allocated to the named plaintiff only rather than pro rata among the class; the policy’s silence (and thus ambiguity) with respect to how to allocate attorneys’ fees in a class action means the policy should be interpreted in the County’s favor.

Separately, the court held that it was not bad faith for Selective to settle the class action instead of challenging class certification. The court noted Selective chose defense counsel who “purportedly were experts in class action suits,” the policy granted Selective the discretion to settle suits filed against the County, and there was no evidence of Selective’s gross disregard of the County’s interests.