Few words in insurance law create as much heartburn for insurers and coverage counsel as the unassuming word “occurrence.” One might ask why this common word, which most people easily understand to mean an “event” or a “happening,” would raise such concern.
The answer to this question lies in the particular importance given to this word in Comprehensive General Liability (“CGL”) policies. Businesses reasonably expect that a claim alleging property damage, bodily injury or advertising injury triggers their CGL policies and the issuing insurance company will defend and indemnify them.
This reasonable expectation results from the seemingly broad grant of coverage in most CGL policies’ insuring clause, which often states: “We will pay all amounts for which the insured becomes legally liable to pay as compensation arising out of personal injury, property damage or advertising liability as a result of an occurrence.”
Insurance companies have placed uncertainty into this equation by redefining the word “occurrence” from its common meaning of an event or happening to something like “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Unfortunately, insurers exploit this definition to deny or to limit coverage that their policyholders reasonably expect and for which those policyholders have paid handsome premiums.
We too often see insurance companies issue automatic denials of tenders for defense when a claim or a lawsuit alleges some intentional conduct on behalf of the policyholder. In these circumstances, insurers commonly assert that because the policyholder’s conduct was intentional, and that the claim cannot fit within the policy’s...
