It’s a disturbingly common situation. A youth gets access to the family gun and, accidentally or otherwise, kills or injures one or more people. The victims (or their survivors) sue the family of the shooter, arguing that family members were negligent in failing to secure the weapon – particularly in cases where there were clear advance signs of mental disturbance or dangerous behavior on the part of the shooter. The family turns to its insurer, seeking coverage. The typical homeowner’s policy states that it will cover the homeowners for all sums they are obligated to pay for bodily injury during the policy period caused by an “occurrence,” which is generally defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” But the policy typically limits the amount that the insurer has to pay for each “occurrence,” and insurers frequently argue, even in cases of multiple victims shot at different times and in different places, that all of the shootings arose from a single occurrence.
In United Services Automobile Ass’n v. Neary, No. 6810 (Alaska, Aug. 16, 2013), the Alaska Supreme Court held that the shooting by a teenager that killed one friend of his, wounded another, and traumatized the parents of both young victims, gave rise to only a single occurrence under the personal liability policy of the shooter’s parents. The teenager, who was entertaining friends at his parents’ home after school, took a revolver from his father’s gun cabinet, loaded it with a single bullet, and proceeded to play a tragic game of Russian roulette. He first pointed the gun at himself and pulled the trigger. He then aimed it as his nearby friend and pulled the trigger again. This time, the gun fired, and the bullet killed his friend and lodged in the spine of a third boy.
The single-occurrence ruling in this case demonstrates the seemingly inconsistent results arrived at by courts applying the “cause” test to substantially similar policy language and apparently parallel factual situations. One reason for the divergent conclusions is that different courts have analyzed two distinct phenomena: either the most immediate act causing the damage, or the act of the insureds that gave rise to their liability.
The majority rule adopted by state courts construing occurrence-based policies, the “cause” test seeks to determine the number of occurrences in a particular instance by looking to the “cause” of the accident. By contrast, the “effects” test looks to the number of injuries resulting from the accident to determine the number of occurrences. Thus, a negligent driver who crashes into two parked cars after careening through a red light may have given rise to either one occurrence under the “cause” test, because he ran the red light, or two occurrences under the “effects” test, because he hit two vehicles. The determination of how many occurrences there are has significant consequences, both for the insured and the injured parties. The reason is that, under many occurrence-based policies, a finding of multiple occurrences unlocks additional coverage limits. A single-occurrence determination where there have been significant damages to multiple parties might bankrupt the policyholder, leave some victims uncompensated, or both.
Moreover, even when courts apply the majority “cause” test to remarkably similar facts, they can arrive at apparently contradictory answers. Thus, in Koikos v. Travelers Ins. Co., 849 So.2d 263 (Fla. 2003), where the policyholder had been sued for negligence for the shooting during a party at his restaurant of two persons, seconds apart and by the same gunman, the court found that there had been two occurrences. It reasoned that “the act that causes the damage . . . constitutes the ‘occurrence.’” The “act” that the court identified in that case was “the immediate injury-producing act” (the firing of each gunshot) rather than “the underlying tortious omission” (the insured’s alleged negligence in failing to provide adequate security). (Interestingly, the Alaska court cited Koikos in arriving at its single-occurrence ruling, asserting that the key factual distinction was that only one shot had been fired, rather than two.)
Disagreeing with the application of the “cause” test in Koikos, the court in Donegal Mut. Ins. Co. v. Baumhammers, 595 Pa. 147 (Pa. 2007), found that the murderous rampage of an adult residing with his parents, in which he shot six people in four locations over the course of two hours, killing five of them, was a single occurrence under his parents’ homeowner’s policy. That court focused on “the act of the insured that gave rise to their liability,” which it determined was their negligence in failing to confiscate their son’s weapon and/or notify the authorities of his unstable mental condition. It noted that focusing on “the underlying negligence of the insured recognizes that the question of the extent of coverage rests upon the contractual obligation of the insurer to the insured.” Thus, “the occurrence should be an event over which [the policyholder] had some control.”
Another pair of opinions shows how cases with similar factual predicates can still yield opposite results under the “cause” test. In Doria v. Insurance Co. of North America, 210 N.J. Super 67 (N.J. Super. Ct. 1986), which involved the accidental injury of two boys who fell, seconds apart, into an uncovered swimming pool on the policyholders’ neglected property, the court found that there had been a single occurrence. Unlike Koikos, Doria focused “on the underlying circumstances of the event which gave rise to the claim of injuries,” which it identified as “the insureds’ failure to properly fence in and cover the abandoned pool, rather than on the injury itself.”
But citing that very case, the court in Addison Ins. Co. v. Fay, 905 N.E.2d 747 (Ill. 2009), reached the opposite conclusion. There, the underlying accident involved the horrific deaths of two young boys who fell into a sand pit on a poorly-secured property and died either from exposure or drowning. Although the court focused on the act of the insured giving rise to liability in determining that the cause of the injuries was the ongoing negligent omission of the property owner in failing to secure the site, it held that the absence in the factual record of any indication that the boys had become trapped simultaneously allowed for the possibility that there had been a second, intervening act of negligence – the continued failure to secure the site – that gave rise to a separate occurrence. (The apparently anomalous nature of the result in Addison is highlighted by the fact that an inferior court in the same state, ruling in a subsequent case, dodged it. The court in Ware v. First Specialty Ins. Corp., 2012 IL App (1st) 113340 (Ill. App. Ct. 2012), limited the applicability of Addison to cases where there are “multiple injuries . . . sustained over an open-ended period of time due to an ‘ongoing negligent omission,’ rather than an affirmative act or acts of negligence.”)
As the above cases demonstrate, even when courts apply the same “cause” test to similar facts when determining whether there have been one or multiple occurrences under the insured’s policy, they may arrive at starkly different conclusions. One reason for the difference is that courts aren’t in agreement as to what they are looking for the cause of. Some courts believe they are looking for the most immediate cause of the underlying injury, while others look to the act (or omission) of the insured which caused their liability. These inconsistencies point out the importance for policyholders seeking to maximize their coverage not only of a close review of the language of their policies, but also a careful analysis of the facts – and a call to their coverage attorney.