In the context of commercial general liability (CGL) insurance policies, two issues can have a significant effect on the amount of an insured’s covered loss, where the loss is attributable to a claim that caused damages over a period of time. They are the number of occurrences implicated by a claim and allocation of the damages associated with the covered loss over the policy years during which it occurred. In cases involving physical abuse, as well as in cases involving other types of intentional misconduct, the claim for which coverage is sought often involves a pattern of ongoing misconduct by an insured spanning multiple policy years.
When multiple policy years are implicated by such a claim and the policies in effect during those years contain a per-occurrence deductible (or self-insured retention (SIR)) or a per-occurrence limit of liability that is less than the policy’s aggregate limit (if any), the determination as to whether each incident of misconduct must be treated as one or multiple “occurrences” has critical bearing on the amount of the total loss allocable to the insured rather than the insurers. Similarly, in this multiple-incident, multiple-year situation, whether the insured can allocate the total loss sustained as a result of multiple years of misconduct to a single policy year, or whether the law requires that such loss be allocated proportionately over all the years during which it occurred, can greatly influence whether the insured, or the insurers, bear the financial brunt of the loss.