One of the first issues policyholders face when analyzing potential insurance coverage for a loss is, assuming they have insurance coverage at all, what are the limits available under their policy. Standard commercial general liability (CGL) policies often contain at least two different sets of limits: per occurrence limits and aggregate limits. A common CGL policy might provide $1 million in per occurrence limits, and $2 million in aggregate limits. Thus, the ability of a policyholder to establish multiple occurrences can be critical to its efforts to maximize insurance recovery. The Wisconsin Supreme Court’s recent decision in Secura Ins. v. Lyme St. Croix Forest Company, LLC provides helpful insight into the standards Wisconsin courts apply in determining the number of occurrences involved in a loss.
Wisconsin courts use the “cause theory” to determine whether a particular event involves a single occurrence, or multiple occurrences. Under the “cause theory”, where a single, uninterrupted cause results in all of the injuries or damage, there is only one occurrence. The question at issue in Lyme St. was whether a single fire that burned for three days straight, and spread to a number of separate properties, resulted in only once occurrence such that the policyholder was stuck with its per occurrence limit ($500,000), or resulted in multiple occurrences such that the policyholder was entitled to the aggregate limit ($2 million). The Circuit Court and Court of Appeals ruled that there was a new cause, and therefore a new occurrence, each time the fire spread across a property line. But the Wisconsin Supreme Court disagreed, and held that although separate properties might have been damaged by the fire, all of the damage at issue was closely linked in both time and geography such that there was only one cause, and thus only one occurrence.
In reaching its conclusion, the Court carefully distinguished prior cases that had found multiple occurrences even where there was a single underlying cause of the damage at issue (for example, asbestos exposure or environmental contamination). What made those cases different, according to the Court, was that the damages occurred at different geographic locations and at largely different times. Obviously, under Lyme St., determination of how many occurrences are involved in a loss can be a complicated, highly fact intensive inquiry.