Liability Insurance And Number Of Accidents

Interpreting the number of accidents or occurrences that are covered by a policy can be confusing.  The State Bar of Texas, Insurance Law Section, Insurance Journal, published an article titled, Texas Law And The Restatement Of The Law Of Liability Insurance: An Initial Comparison Of Blackletter Principles.  This article dedicates about a page discussing the issue.

The article tells us that for liability policies, the number of occurrences is determined by finding the number of events or incidents for which the insured is liable.  This is discussed in quite a number of Texas cases starting with the 1971, 5th Circuit opinion styled, Maurice Pincoffs Co. v. St. Paul Fire & Marine Ins. Co.

The Restatement of Law essentially mirrors Texas law in adopting a “cause” standard:

§ 38. Number of Accidents or Occurrences

For liability insurance policies that have per-accident or per-occurrence policy limits, retentions, or deductibles, all bodily injury, property damage, or other harm caused by the same act or event constitutes a single accident or occurrence.

One of the potentially interesting wrinkles comes in the comments to Section 38.  In comment C, the Restatement of Law articulates common, and Texas consistent, principles of interpretation in the context of the number of occurrences analysis.  It reads:

If the facts are not in dispute, the court can make as a-matter-of-law determinations of the number of causes and thus the number of per-occurrence or per-accident policy limits or deductibles to apply in a given case.  In making such determinations courts may take into account the structure of the overall insurance program to determine what number of causes is most consistent with the intent of the parties.  In such cases, the court should follow the ordinary rules of insurance policy interpretation, assuming the policy contains standard form terms, and, to the extent that the policy is ambiguous as applied to the claim at issue, choose the interpretation that favors the insured, unless the insurer persuades the court that this interpretation is unreasonable.

A subsequent illustration of the principle above, seems to extend the doctrine of construing ambiguous language in favor of the insured to allow courts to make matter of fact determinations regarding the number of causes.  The concern is whether this amounts to a judicial usurpation of a fact question that should be more properly left to the jury.