(Article from Insurance Law Alert, December 2015)
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Our October 2015 Alert reported on a Second Circuit decision holding that under New York’s “unfortunate event” test, a series of closely-related automobile accidents within a short time span constitute three separate “accidents” for purposes of policy coverage. Itzkowitz v. Nat’l Liab. & Fire Ins. Co., 2015 WL 5332109 (2d Cir. Sept. 15, 2015), as amended (Sept. 22, 2015). There, the court rejected the insurer’s contention that the policy language at issue (providing that all injury and damage “resulting from continuous or repeated exposure to substantially the same conditions will be considered as resulting from one ‘accident’”) evidenced an intent to aggregate separate accidents into a single occurrence. In a decision issued last month, a New York federal district court, faced with nearly identical policy language, reached the opposite conclusion and held that policy language established the intent to aggregate multiple incidents into one occurrence. Verlus v. Liberty Mutual Ins. Co., 2015 WL 7170484 (S.D.N.Y. Nov. 12, 2015).
Verlus arose from an attack by two dogs on two pedestrians, Jean and Joanne, who were walking down the street at the same time. One dog attacked Jean, while the other attacked Joanne. After less than a minute, Joanne escaped to higher ground, at which point the dog that had been attacking her joined the other dog in attacking Jean. The pedestrians successfully sued the dogs’ owners for their injuries. The pedestrians then received a payment from the dog-owners’ insurer (Liberty Mutual) that fell far short of the judgment awarded in the tort litigation. Liberty Mutual argued that the sum paid was the maximum allowed for a single occurrence under the dog-owners’ policy. The pedestrians sought a declaration that the dog attack constituted three separate occurrences under the policy (the attack on Jean, the attack on Joanne, and the attack on Jean by the dog that was originally attacking Joanne).
The court noted that New York applies the “unfortunate event” test to determine the number of occurrences unless policy language evidences the parties’ intent to aggregate separate events into one occurrence. The court held that the language before it (stating that “continuous or repeated exposure to substantially the same general harmful conditions shall be considered to be the result of one occurrence”) evidences such intent. Therefore, the court declined to apply the unfortunate event test and instead held that the proper inquiry was “whether the underlying attacks emanated from the same location at a substantially similar time.” Applying this standard, the court concluded that the attacks constituted a single occurrence because the pedestrians were walking close together, the dogs approached from the same direction at the same time, and the incident lasted for a short three to four minute period.