Hunton Insurance Recovery Blog

A Delaware court recently held in Mattel, Inc. and Fisher Price, Inc. v. XL Insurance America, Inc., et al., that a series of product liability claims dating back to 2013 constituted a single “occurrence” under the toy manufacturer’s and distributor’s commercial general liability (CGL) policies.

The case stemmed from Mattel’s request for defense and indemnity coverage in response to claims that certain toys caused bodily injuries to infants. The CGL coverage tower, which included policies issued by multiple primary, excess, and umbrella insurers, spanned from 2011 to 2020.

The extent of coverage is often a function of how many occurrences (or accidents) are involved in a claim. For example, lawsuits based on product liability claims may involve a flawed manufacturing process constituting a single occurrence, or the sale of each individual product may result in hundreds of occurrences. A recent ruling involved the number of occurrences debate and resulted in the insured establishing coverage for up to $55 million instead of just $5 million in limits. 

In a recent client alert, Hunton Andrews Kurth LLP real estate attorney Laurie Grasso and insurance attorneys Geoffrey B. Fehling, Cary D. Steklof, and Evan J. Warshauer discuss the important lesson real estate companies and their officers and directors can take away from the Illinois federal district court’s decision in Old Guard Insurance Company v. Riverway Property Management, LLC et al., No. 1:23-cv-01098 (C.D. Ill. Sep. 6, 2024). The court found a commercial general liability insurer had no duty to defend or indemnify a property management company or its owner in lawsuits that included allegations of intentional conduct, holding that the allegations did not fall within the policies’ definition of occurrence, which required “an accident.”

Commercial general liability insurance policies are often written on an “occurrence” basis. An “occurrence” is typically defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Coverage, therefore, requires generally that the “bodily injury” or “property damage” (or “advertising injury” or “personal injury”) happen fortuitously during the effective policy period. Central to this inquiry is knowing when the injury or damage took place.