I’ve read a lot of “number of occurrences” decisions.  There are a gazillion of them addressed in Insurance Key Issues.  They involve seemingly limitless scenarios for which the number of occurrences must be determined.  But there are also some that arise with regularity, including shootings, product failure, sexual misconduct, auto accidents, construction defect and exposure to asbestos and other hazardous substances.

In Auto-Owners Ins. Co. v. Long, No. 18A-CT-852 (Ct. App. Ind. Oct. 30, 2018) the Court of Appeals of Indiana addressed a number of occurrences scenario that I’ve never seen before.  The decision seems pretty obvious.  Yet the trial and appellate courts still disagreed.

Long involved coverage under the following circumstances.  In February 2009, an employee of The Art of Design mailed a box containing ten bottles of a chemical product.  The product contained toxic chemicals.  While at a postal service processing facility the box was passed through a conveyor system known as the Singulator.  The box broke open and a damaged bottle leaked onto a conveyor belt, releasing toxic fumes.  The box was not labeled to say that it contained hazardous materials and it had been sealed by only a piece of masking tape.  During the clean-up process, a postal employee was overcome by the fumes and went to the hospital.  The employee died in 2016.  His Estate claimed that he was permanently disabled as a result of injuries sustained by exposure to the chemical fumes and such exposure was a direct and proximate cause of his death in 2016.

The Postal Service determined that The Art of Design violated Postal Service regulations relating to both the labeling and packaging of hazardous materials.  Had the box been properly labeled, it would not have been put through the Singulator but, rather, would have been hand-sorted.

At issue was coverage for Art of Design for the injuries sustained by the Postal employee.  Specifically, number of occurrences – one or two -- which dictated the amount available for the claim -- $1,000,000 or $2,000,000 (presumably the aggregate limit). 

The trial court found two occurrences – the insured failed to both properly label and package the box.  But the appellate court, noting that a prior Indiana appellate court had adopted the “cause test,” for determining  number of occurrences, disagreed: “While the Insured failed to both properly label and package the box, there was only one accident that resulted from the Insured’s failure to take appropriate preventative measures to avoid a spill.  Stated differently, although the Insured did two things wrong in shipping the package, the wrongdoing resulted in one spill, i.e., ‘one proximate, uninterrupted, and continuing cause which resulted in’ Long’s injury.”