Recently, the Sixth Circuit Court of Appeals, interpreting Kentucky law, held that the number of “occurrences” under a commercial liability insurance policy is determined by looking at the cause of the injury, not its effects. Evanston Ins. Co. v. Hous. Auth. of Somerset, 867 F.3d 653 (6th Cir. 2017). In the underlying dispute, a tree on the housing authority’s property fell on two cousins, killing one and severely injuring the other. The cousin that died was pregnant and doctors delivered her baby, but he died shortly thereafter. In 2013, a state court jury found the housing authority liable and awarded the plaintiffs $3.7 million.

The housing authority was a member of a self-insurance fund that had a general liability policy with Evanston Insurance providing $1 million in coverage “per occurrence” for bodily injury and property damage claims, subject to a $2 million aggregate limit. Evanston filed a declaratory judgment in federal district court in Kentucky taking the position that $1 million was the coverage cap, while the housing authority argued it was between $2 million and $4 million. The district court ruled in favor of Evanston, and the housing authority appealed.

In its decision, the Sixth Circuit focused on the language of the fund’s policy, which insured members for general liability stemming from “bodily injury …caused by an occurrence …” and defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The defendants argued that the deaths and injuries arose from multiple causes, i.e., cardiac arrest, blunt force trauma, etc., and that each effect qualified as an occurrence.

The Sixth Circuit rejected that approach and held that the definition of “occurrence” looked to the number of causes, not the number of effects, and that the fallen tree was a single occurrence, the effect of which caused multiple injuries. In affirming the district court’s decision, the Sixth Circuit noted that a majority of jurisdictions use this approach in determining the number of “occurrences.”