One of the many benefits of occurrence-based insurance policies is that coverage is available for incidents that happen during the policy period no matter when a claim is made.

But as the Michigan Circuit Court for the Sixth Judicial Circuit's recent decision in Oxford Community Schools v. MASB-SEG Property/Casualty Pool Inc. illustrates, the amount of coverage available under these types of policies often depends on how many occurrences (or accidents) are involved in a claim. In this case, the difference was tenfold, as the debate was whether the insurance limit was $5 million or $55 million.  

Courts addressing the number of occurrences issue have reached varying conclusions, emphasizing that the outcome depends on the specific facts, policy language and applicable law.

Background

The key dispute in Oxford was about an ambiguity in the definition of "occurrence."

The dispute arose from a mass shooting at Oxford High School in Oxford Township, Michigan. The shooter killed four students and injured seven others, and the victims' families subsequently filed state and federal lawsuits against the school district.

When the school district sought coverage under its commercial general liability policy, the insurer agreed to defend and indemnify the school district.

The insurer took the position that the bodily injury claims in the underlying lawsuits were caused by one "occurrence," defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general conditions." Thus, according to the insurer, coverage was limited to only the $1 million limit available under the primary policy and the $4 million limit under the excess liability policy.

The school district countered that the claims in the underlying lawsuits were separate "occurrences" for each individual injured, with each injury being caused by separate, independent decisions by the shooter to fire his weapon.

According to the school district, the policy's definition of "occurrence" was ambiguous, and thus, at the very least, the school district's interpretation that each injury-causing shot constituted a separate "occurrence" was reasonable.

So, rather than $5 million in total coverage, the school district was entitled to $55 million in limits, with the $5 million limit applying separately to each of the 11 victims.

Michigan Court Finds Definition of "Occurrence" Ambiguous

The Oxford court found in an Oct. 30, 2024, hearing that the policy's definition of "occurrence" was ambiguous and agreed that the school district's interpretation of "occurrence" applying to each injury-causing bullet shot by the shooter was reasonable.

In relying on the basic insurance principle that ambiguous language should be construed against the insurer, the court held that each separate gunshot fired by the shooter was a separate act with separate causes and effects, and thus constituted a separate "occurrence" under the policy.

Accordingly, the school district may be entitled to $5 million in limits per occurrence. With 11 victims, the total coverage was capped at $55 million.

Single Versus Multiple Occurrences, According to Other Courts

Given how often the number of occurrences debate underlies disputes between policyholders and their insurers, several courts have addressed the issue and reached conclusions similar to the Oxford court's decision.

For example, in 2021, the Montana Supreme Court in National Indemnity Co. v. State of Montana agreed with the policyholder's theory of multiple occurrences arising out of a series of personal injury claims against the state of Montana for alleged failure to warn residents about the danger of asbestos exposure. There, the state's insurance policy defined "occurrence" as "an event, or a continuous or repeated exposure to conditions, which results in bodily injury or property damage."

The insurer argued that there was only one occurrence because the asbestos claims stemmed from one cause, i.e., the state's "singular" decision to conceal its knowledge of the asbestos conditions. The court disagreed and held that the number of occurrences was determined by the number of times the state failed to warn residents of their asbestos exposure. As a result, the state was entitled to $3 million in coverage for each time the state failed to warn, rather than be limited to only $3 million in total coverage.

Similarly, in 2009, the U.S. District Court for the Northern District of California in Evanston Insurance Co. v. Ghillie Suits.com Inc. found a separate occurrence where a type of military camouflage suit, a "ghillie suit," that the policyholder manufactured and sold caught fire and injured two Marines during a training exercise.

One Marine caught fire after his suit ignited by a flash from firing his weapon, and the second Marine caught fire while trying to put out the fire from the first Marine's suit. The relevant policy defined "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

The federal court focused on the "continuous or repeated exposure to substantially the same general harmful conditions" language of the definition and reasoned that the second Marine was far from the zone of danger and thus not exposed to "substantially the same" conditions as the first Marine. Rather, the second Marine made an "independent decision" that resulted in his exposure to a harmful condition. Thus, the court held that the fires were two separate occurrences, and the manufacturer had $2 million in total coverage instead of $1 million.

Other courts interpreting similar language, however, have found only one occurrence even where the incident results in hundreds of separate injuries.

For instance, in Travelers Casualty Insurance Co. of America v. Mediterranean Grill & Kabob Inc., the U.S. District Court for the Western District of Texas ruled in 2020 that 124 separate cases of food poisoning constituted a single occurrence because a single cause gave rise to the lawsuits against the restaurant that served the contaminated food.

In that case, similar to the definition at issue in Oxford, the policy defined "occurrence" as "an accident, including continuous or repeated exposure to the same general harmful conditions." However, the Texas federal court reached the opposite conclusion, in part, because controlling precedent required that the focus in interpreting "occurrence" be on the event causing the injuries rather than on the number of "injurious effects."

The decision reduced the amount of coverage available to the restaurant, as the insurer would have had to pay over $1.5 million — the remainder of the aggregate policy limit — if the food poisoning cases had been counted as separate occurrences. Instead, the insurer's total exposure was capped at $1 million.  

Conclusion

When dealing with insurance coverage for claims involving potentially different accidents, an acknowledgment of coverage is often just the first step. As the cases above illustrate, the real debate is about the extent of insurance that is available for those kinds of claims.

These decisions highlight how the specific policy language, the facts of the case, and the governing law can make all the difference. In other words, seemingly similar cases may not have similar outcomes, as the devil is in the details.

While the facts of a given case or claim often are out of a business's control, policyholders can maximize coverage by analyzing these issues at the outset of a claim. Often, the specific policy language and choice-of-law principles can be outcome determinative.

As the Oxford case illustrates, the number of occurrences debate is far from settled.