Recently, Kevin Healey continued his series on Deconstructing the All-Risk Policy and discussed the importance of the fortuity doctrine.
Closely related to the fortuity doctrine is the term “accident” that is found within an insurance policy’s “occurrence” provision. This is significant because insurance carriers require that an “occurrence” take place as a condition precedent to indemnification.
Naturally, we need to know how courts define the term “accident” to determine whether the policy’s “occurrence” provision has been triggered. Within the context of an insurance policy, an “accident” is “an event happening without any human agency, or, if happening through such agency, an event which, under circumstances, is unusual and not expected by the person to who it happens. Black’s Law Dictionary, 7th ed. In lay terms, an “accident” is an action that leads to a mistake or an unexpected outcome.
It is difficult to differentiate the terms “occurrence” and “accident” because the courts often use the terms synonymously.
In CTC Development Corporation, Inc. v. State Farm Fire and Casualty Company, the First District Court of Florida declared, “[w]e cannot state there is a meaningful difference in language between an ‘accident’ and an ‘occurrence’ ….” CTC Development filed suit against State Farm seeking indemnification for its construction mistake under its policy. State Farm denied any defense or coverage obligations under the policy, contending that the damages claimed “did not constitute property damage caused by an ‘occurrence’ or an ‘accident’ under the terms of the policy.” The trial court agreed with State Farm and granted summary judgment in its favor. The First District Court of Appeals overruled the trial court and found that CTC Development constructing the building beyond the set-back line was an “accident” and constituted an “occurrence” under the policy. Despite CTC Development’s intentional act of building beyond the set-back line, the court found this mistake to be an “accident.”
Insurers continue to argue that intentional acts that lead to mistakes are not “accidents” and are therefore excluded under the “occurrence” provision. Thankfully, courts continue to recognize the meaning of “accident” provides coverage not only for an accidental event, but also for the unexpected injury or damage resulting from an intentional act. As a result, under this type of policy language, if the resulting damages can be viewed as unintended by a fact-finder, the event constitutes an “accident” for purposes of the liability insurance policy.