Commercial General Liability Policies: Challenges in Determining Claims Triggers

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

While all businesses need sufficiently broad general liability coverage, insurance companies can thwart such careful planning by using a fairly expansive list of justifications to deny claims.  A rationale that can be difficult to understand involves “trigger issues.” This type of issue concerns whether the event or loss giving rise to the claim arose during the policy period.  Trigger principles can be extremely important because they often provide a basis for denying a claim in part or in its entirety.  There are many dimensions to the trigger issue, so our Florida Insurance Claims Law Firm has provided some examples of the types of complexities that can arise in this context.

A basic overview of this type of denial requires an understanding of a couple of preliminary concepts.  Generally, commercial liability policies define the time period during which a policy provides financial protection against loss to a business.  This window is often referred to as the “policy period,” which will be defined by an inception date that commences coverage and a termination date after which the policy is no longer in effect.  Coverage will be appropriate when a covered peril or loss occurs during the policy period.  The key to determining whether the claim falls within the “policy period” will depend on the timing of the event, loss, or claim that “triggers” coverage.

While there are certain situations where evaluating whether a policy trigger occurred during the policy period is fairly straightforward, this can be a complicated issue.  If the claim is related to a motor vehicle accident, the issue of determining the relevant timing can be readily defined in terms of the date of the collision.  However, the situation can be much more difficult, such as a loss caused by a latent defect or a peril that causes ongoing injury or property damage.

In broad terms, policies are typically based on a “claims made” or “occurrence” basis.  When the policy is triggered based on an event (i.e. occurrence basis), the relevant consideration is when the incident, property loss, or bodily injury occurs without regard to the date upon which the claim is actually filed by the insured.  By contrast, “claims made” policies turn on the date upon which a liability claim is made against a business.  The importance and complexity of this issue has led to widely divergent rules and decisions from state to state. 

The issue of whether the loss occurs within the policy period also can be complicated by injuries that are progressive or ongoing in nature.  For example, states differ on how to handle wrongful imprisonment claims that occur over the span of a number of years.  Some jurisdictions hold that when liability claims are based on a continuing injury of this nature all policies that are effective during any period of the ongoing injury should be available to the insured.  However, other courts have found that such claims occur when the falsely imprisoned claimant files a lawsuit against the insured.  This position limits the applicable policy to those in effect when the lawsuit seeking damages is actually filed against the policyholder.

However, legal representation is important in this context because policy language can significantly impact the coverage trigger issue.  Certain policies, for example, contain language referred to as “deemer” provisions.  Insurance companies issuing policies with such clauses often argue that a claim for an ongoing injury is “telescoped” under such a provision.  The language of this type of provision might limit claims to bodily injury or property damage to the last day that the insured was impacted or exposed to the harm.  While some courts have accepted this “telescoping” contention, which greatly limits a policyholder’s rights, other courts have refused to accept such an interpretation.

Our Miami Commercial Liability Claims Attorneys represent businesses struggling to get their insurance company to fulfill its duty to indemnify, defend, or pay a claim.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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