Photo by Kevin Hurd and AP
Photo by Kevin Hurd and AP

A recent decision by the Supreme Court of Wisconsin1 might predict how other courts would analyze coverage under commercial general liability insurance policies for wildfires. In May 2013, a fire broke out on forest land owned by Lyme St. Croix Forest Company. The fire burned nearly 7,500 acres over the course of three days and damaged real and personal property owned by various individuals and businesses.

The fire was alleged to have begun within a piece of logging equipment owned by Ray Duerr Logging, LLC (“Duerr”). At the time of the fire, Duerr was insured by Secura under a commercial general liability policy with a $2 million aggregate limitation. The policy also contained a logging endorsement, the per-occurrence limit was reduced to $500,000 for property damage due to fire arising from logging or lumbering operations. Secura believed that the $500,000 policy limit applied, rather than the $2 million aggregate limit and filed a declaratory judgment action.

The Supreme Court of Wisconsin was presented with determining whether the fire was a single occurrence for purposes of the CGL policy, or whether there was a new occurrence each time the fire crossed a property line. The court began by looking at the policy language, which defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The court then looked to the “cause theory” which provides “where a single uninterrupted cause results in all of the injuries and damage, there is but one ‘accident’ or ‘occurrence.’ ” If the cause and results are so simultaneous or closely linked in time and space as to be considered by the average person as one event, then only a single event has taken place.

In concluding that the fire was a single occurrence, the court noted that the fire burned continuously for three uninterrupted days in a discrete area caused by a single precipitating event. The court believed that the average person would consider this one event regardless of how many properties lines the fire crossed. In that regard, the Supreme Court of Wisconsin believed that the number of properties damaged by the fire was irrelevant – whether one person, or multiple persons owned the 7,500 acres did not determine the number of occurrences.

Additionally, the Wisconsin Supreme Court disagreed with the court of appeals determination that there was an occurrence each time the fire – fueled and expanded by the consumption of new materials – spread to a new piece of real property and caused damage. The Wisconsin Supreme Court held that such a conclusion would result in an unfathomably large number of occurrences, an interpretation which would cause an unreasonable result under the policy. As such, the Wisconsin Supreme Court concluded there was a single occurrence, subject to the $500,000 policy limit.
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1 Secura Ins. v. Lyme St. Croix Forest Co., LLC, 918 N.W. 2d 885 (WI. Oct. 30, 2018).

  • shirley heflin

    Dear Ms. Phillips:

    The Insured lost big on this one. The Wisconsin Court of Appeals ruled that – as the fire spread and crossed another property line – that it constituted a new loss thereby triggering the $2 million policy limit.

    Unfortunately, the Wisconsin Supreme Court disagreed and indicated that the answer to the following question was common sense.

    The question being, to wit:

    “…The Supreme Court of Wisconsin was presented with determining whether
    the fire was a single occurrence for purposes of the CGL policy, or
    whether
    there was a new occurrence each time the fire crossed a property
    line…”

    Even I – a layperson – agree that a fire that continues burning for three (3) – uninterrupted days – burning different items, structures, dwellings, etc., along the way is a SINGLE occurrence arising from one loss date. So the Insured’s $2 million per occurrence loss policy limit awarded by the Court of Appeals, was stripped away the Supreme Court wherein they ruled that the $500,000.00 policy limit was applicable to the Insured under the “one loss” theory

    It’s very rare that I agree with the Insurer’s position, however, this is one of those times. Do I like the feeling in the bottom of my stomach after seeing the insured lose? No, I do not.

  • Bill Wilson

    If it was an ISO CGL policy, this language pretty much spells out that the limit applies no matter how many properties are involved:

    SECTION III – LIMITS OF INSURANCE
    1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of:
    a. Insureds;
    b. Claims made or “suits” brought; or
    c. Persons or organizations making claims or bringing “suits”.