Public policy and insurance law allow insurance coverage only for fortuitous events and not for harm or loss resulting from intentional acts. To this end, insurance policies provide coverage when an injury or loss is caused by an “occurrence” which is typically defined as “an accident.” While coverage disputes often involve the detailed conditions and exclusions that modify coverage, the analysis begins with determining whether an “occurrence” has even triggered coverage. This seemingly simple question has been the subject of many cases and has resulted in lengthy opinions detailing the proper definition, analysis and application of the term.
A handful of recent cases have explored the issue. See, e.g., W.R. Berkley Corp. v. Rea’s Country Lane Constr., Inc., 2013 Miss. App. LEXIS 464 (holding that the term “occurrence,” defined as an “accident,” refers to the insured’s action and not whatever unintended damages flowed from the act.”); But see, Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760 (2013) (holding that a volitional act of an insured may still constitute an occurrence because insurance policies are “designed to cover foreseeable risk, including negligent acts”).
The most notable recent decision on the issue came from the Wisconsin Supreme Court, which narrowly defined the term “occurrence” and found that the volitional act of an insured resulting in an unexpected injury was not an “occurrence.”
In Schinner v. Gundrum, 2013 WI 71, the insured hosted an underage drinking party where one of the guests became intoxicated and assaulted another guest. The victim sued the party host and the host’s insurer, but the insurer disputed coverage arguing that there was no “occurrence” to trigger its defense and coverage obligations because the insured acted intentionally in hosting the party and providing alcohol which led to the injury.
The trial court agreed with the insurer that no “occurrence” existed because the injury resulted from the insured’s act of “intentionally procuring alcohol for an underage drinking party.” The appellate court came to a vastly different conclusion and reversed the decision, holding that the assault—not the hosting of the party—was the injury-causing event and constituted an accident, at least from the standpoint of the insured.
Consistent with the insurer’s argument and the trial court’s original decision, the Supreme Court ruled that there was no “occurrence” because the insured intended to throw the party which led to the injury. The majority stated that the question is not whether the result was expected or intended, but whether the act itself was accidental. “A result, though unexpected, is not an accident; the means or cause must be accidental.” The majority viewed the hosting of the party as the “means or cause” and noted that the insured intended to host the party, intended to invite minors, intended to provide alcohol to those minors, and intended to encourage heavy drinking. These actions “were entirely volitional… [the insured] did not host the underage drinking party by mistake, against his will, or by chance.” The majority concluded, “Bodily injury was hardly unforeseeable. All the conditions for a tragic injury had been put in place, and they were put in place intentionally.”
Accordingly, the majority set forth a narrow definition of “occurrence” that focuses on the insured’s intent to act and requires a lack of volition to constitute an accident.
The dissent objected to this narrow definition and questioned the majority’s analysis. While the majority looked at whether the insured intended the act, the dissent looked at whether the insured intended the injury. In fact, both the majority and dissent agreed that the determination of an “accident” or “occurrence” should be viewed from the standpoint of the insured, but they applied this analysis differently. For the dissent, the injury-causing event was not the party, but the assault; and the proper question should have been whether the assault of the victim was an accident from the perspective of the insured, not whether the insured intentionally threw the party. Or, more simply put, “Did the insured expect or intend the injury?” But the majority based its decision on the insured’s intent to throw the party and, in a more objective tone, the fact that the insured should have foreseen the result.
According to the dissent, such a narrow definition of the word “accident” by the majority “so greatly restricts the insurer’s liability as to render the policy valueless or even meaningless, and denies coverage for what is the predicate of any likely liability against the insured.”
The Wisconsin Supreme Court’s decision indeed provides a narrow definition of “occurrence” that limits an “accident” to those acts or events lacking volition, even if the resulting injury was unintended or unexpected. According to the ruling, it is the insured’s intent to act in light of foreseeable harm rather than the insured’s subjective intention or expectation of injury that controls the “occurrence” analysis in Wisconsin. The decision is favorable for insurers who can utilize this restricted definition of “occurrence” to avoid coverage obligations.
As the recent case law demonstrates, insurers should be aware of how courts define “occurrence” and analyze the actions of the insured, as they can utilize such definitions to limit coverage obligations where appropriate.
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