Illinois Appellate Court Examines Number Of Occurrences And Limits Application Of Time-And-Space

On January 11, 2013, the Illinois Appellate Court for the First District in Chicago issued an important decision concerning the test for the number of occurrences under an insurance policy. Ware et al. v. First Specialty Insurance Corp., No. 1-11-3340, 2012 IL App (1st) 113340 (Ill. App. Ct. Jan. 11, 2013). The number of occurrences can be a critical issue in insurance coverage litigation because it often determines the number of deductibles the policyholder must pay, as well as the maximum coverage limit a policyholder will receive.

In general, courts look first to the plain language of the policy when determining whether injuries were the result of a single occurrence or multiple occurrences. However, when the terms of the policy, standing alone, are insufficient to make this determination, courts generally look to one of two theories. Illinois courts, as well as many other jurisdictions, typically apply the "cause theory," which looks to the cause or causes of the injury to determine the number of occurrences. If the injuries to multiple persons were the result of a single cause, the court will likely hold that it was a single occurrence; multiple causes would constitute multiple occurrences. An alternate test is the "effect theory," which determines the number of occurrences based on the number of claims or injuries that result from a cause or event.

In 2009, the Illinois Supreme Court stated in Addison Ins. Co. v. Fay, 905 N.E.2d 747 (Ill. 2009) that, in some circumstances, the cause theory may be an insufficient rubric by which to determine the number of occurrences. In Addison, two boys went to go fishing together and their bodies were later found in an excavation pit. Claims against the property owner alleged a failure to properly secure the site. The boys' times of death could not be determined, nor could the amount of time that elapsed between their deaths. The Addison court held that, in this scenario - when multiple injuries are sustained over an undetermined period of time due to an "ongoing negligent omission," rather than an affirmative act or acts of negligence - the "time-and-space" test, rather than the cause theory, can apply.

Under the time-and-space test, as articulated by the Illinois Supreme Court, when injuries and their causes "are simultaneous or so closely linked in time and space as to be considered by the average person as one event, then the injuries will be deemed the result of one occurrence." Addison, 905...