(Article from Insurance Law Alert, January 2025)
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Holding
A Michigan court ruled that the term “occurrence” in a liability policy was ambiguous and therefore construed it in favor of the policyholder, finding that each injury-causing shot in a school shooting constituted a separate occurrence. Oxford Community Schools v. MASB-SEG Property/Casualty Pool, Inc., No. 24-204988 (Mich Cir. Ct. Oct. 30, 2024) (Transcript).
Background
The coverage dispute arose out of a mass shooting at a Michigan high school that killed four students and injured seven others. The decedents’ families sued the school district, which sought coverage under a general liability policy. While the insurer agreed to defend and indemnify the school district, the parties disputed the number of occurrences that arose out of the incident. The school district argued that there were 11 occurrences based on the number of individuals shot, whereas the insurer argued that the gunman’s conduct constituted a single occurrence.
Decision
In an oral ruling, the court deemed the term “occurrence”—defined by the policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions”—ambiguous. The court concluded that at a minimum, the school district’s interpretation of each shot constituting a separate occurrence was reasonable. The court therefore construed the ambiguity in favor of the school district, finding multiple occurrences under the policy.
During oral argument, counsel for the school district noted that separate criminal charges were brought against the shooter for each victim and that each victim was injured by a separate shot.
Comments
The number-of-occurrence determination often has significant implications for the amount of potential insurance recovery. For example, in this case, a single-occurrence finding would have limited the school district’s recovery to $5 million ($1 million under a primary policy and $4 million under an excess policy). However, the court’s multiple-occurrence ruling may allow the school district to recover $55 million under the primary policy since the policy did not contain an aggregate limit.
The matter is currently pending on appeal. We will keep you posted on any developments in this case.