California Insurance - An Insurer is Only Liable for a Single “Occurrence,” Where an Uninterrupted Event (Landslide) Causes Both Property Damage and Personal Injury Over Several Policy Periods
Safeco Ins. Co. of America v. Fireman’s Fund Ins. Co., No BC278196 (Cal. Ct. App. March 14, 2007)
A single event that causes both property damage and personal injury over a period of several years is a single occurrence, even where an insurance policy provides a different definition of occurrence for each type of injury. According
to California’s Court of Appeal, Second District (Los Angeles), it “is irrelevant that there are multiple injuries or injuries of different magnitudes, or that the injuries extend over a period of time.”
In Safeco, Harold Lancer and his neighbors faced multiple lawsuits after the hill they lived on collapsed in a landslide, making portions of the downhill properties unusable. Despite an order from the City to repair the
slope, Lancer and his neighbors failed to do so for several years – causing continuing injury to the downhill property owners. Lancer had a Fireman’s Fund homeowner’s policy in effect at the time of the landslide,
which he renewed in each of the three subsequent years. This policy had a $500,000 per occurrence limit of liability. Lancer was also insured under a Safeco policy that provided $5 million in excess coverage.
The lawsuits settled, with Lancer’s insurers contributing approximately $2 million on his behalf. Fireman’s Fund defended Lancer in the lawsuits, pursuant to its duty to defend, and contributed a total of $500,000 to
the settlements. Safeco paid $1.54 million on Lancer’s behalf, under a reservation of rights. Safeco then filed a declaratory relief action against Fireman’s Fund, claiming that Fireman’s Fund was liable for
multiple policy limits because there had been multiple occurrences under its policies.
The Fireman’s Fund policy provided two definitions of “occurrence.” Where the harm was property damage, occurrence was defined to trigger coverage at the time the injury occurred. Where the harm was personal
injury, occurrence was defined to trigger coverage at the time the wrongful act occurred, and not the injury. Safeco argued that because the landslide resulted in both property damage and personal injury, there were two different
occurrences under the policy. Safeco further argued that because both types of harm occurred during each of Fireman’s Fund’s four successive policy periods, Fireman’s Fund was liable for four times its per occurrence
limit.
The trial court found the landslide was a single occurrence and granted summary judgment in favor of Fireman’s Fund. The Court of Appeal affirmed, reasoning that the different definitions of occurrence “determined if
a particular policy provided coverage, not the amount of coverage.” The court relied on a series of cases that have found courts should focus on the events causing the injury, and not on the injury itself, when determining
the amount of insurance coverage. The court found that where there was “one uninterrupted cause or event . . . that resulted in all damage,” there could be only one occurrence. The court also found it irrelevant that
the injuries continued into subsequent policy periods. According to the court, “[p]olicy limits are based on the number of occurrences, not the amount, type, or timing of the damage.”