The Fifth Circuit in Evanston Insurance Co. v. Mid-Continent Casualty Co. recently held that multiple collisions caused by the same insured driver over a span of 10 minutes constitute a single occurrence subject to a $1 million limit in the insured’s primary policy with Mid-Continent. The holding reversed a lower court’s ruling that Mid-Continent is liable for an additional sum the excess insurer, Evanston, paid to resolve all of the claims arising from the collisions. At issue, a fundamental question about causation and coverage under commercial liability insurance.

The incident took place on November 15, 2013, when the driver of the insured’s truck lost control of the vehicle and struck four different vehicles and a toll plaza during a span of 10 minutes. All of the claims arising from the incident were ultimately settled. Mid-Continent contributed $1 million towards the resolution of the claims, contending that it was only obligated to pay its $1 million per occurrence limit because all of the collisions were part of a single occurrence under its policy. Consequently, Evanston paid the remaining amounts of the claims and brought an action against Mid-Continent for its portions of the payments and its defense costs, arguing that the collisions constituted separate occurrences, thereby implicating multiple policy limits.

The district court ruled in Evanston’s favor and ordered Mid-Continent to pay Evanston over $1 million and the costs of Evanston’s defense. The Fifth Circuit panel unanimously reversed. The Fifth Circuit reasoned that the ongoing negligence of the insured driver “was the single ‘proximate, uninterrupted, and continuing cause’ of the collisions.” The panel further stated that “absent any indication that the driver regained control of the truck or that his negligence was otherwise interrupted between collisions . . . all of the collisions resulted from the same continuous condition.” As a result, the Fifth Circuit concluded that Mid-Continent exhausted its coverage when it paid the $1 million per occurrence limit, and vacated the lower court’s finding.

The decision contributes to the continued debate over whether a sequence of events constitutes one or more occurrences. Understanding the applicable standard is critical, since there may be instances where one standard is more beneficial than the other. For instance, where an insurance program has a large retention, aggregation of multiple events into a single occurrence would be preferable to multiple occurrences. Conversely, where an insurance program contains a relatively low per occurrence limit, as was the case under the Mid-Continent primary policy, multiple occurrences may prove to be more advantageous. Given the substantial impact that the number of occurrences can have on the financial outcome of a claim, policyholders should engage an experienced coverage professional when structuring their insurance program and pursuing a claim following a loss.