Today we are continuing our look at active shooter insurance coverage. If you remember last time, we discussed
the events that took place and the subsequent legal filings. Today we’ll see what coverage existed and whether or not it was sufficient for the situation.
The big question is whether or not mass shootings are covered by general liability insurance. Let’s look at it from the standpoint of a typical General Liability Insurance policy and the language found in modern ISO Commercial Forms.
The standard CGL insuring agreement, in relevant part, reads as follows:
SECTION I – COVERAGES
COVERAGE A – BODILY INJURY AND PROPERTY
- Insuring Agreement
A. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result. But:
- The amount we will pay for damages is limited as described in Section III – Limits Of Insurance; and
- Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B or medical expenses under Coverage C.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments – Coverages A and B.
B. This insurance applies to “bodily injury” and “property damage” only if:
- The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
- The “bodily injury” or “property damage” occurs during the policy period; and
- Prior to the policy period, no insured listed under Paragraph 1 of Section II Who Is An Insured and no “employee” authorized by you to give or receive notice of an “occurrence” or claim, knew that the “bodily injury” or “property damage” had occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the “bodily injury” or “property damage” occurred, then any continuation, change or resumption of such “bodily injury” or “property damage” during or after the policy period will be deemed to have been known prior to the policy period.
Now, this gets interesting and becomes a matter of not only having active shooter insurance, but of actually understanding what the policy says. I know that last part was a bit boring and maybe even somewhat confusing, the situation is, that at first glance, it would appear that the company’s liability coverage should take care of things.
If that’s what you thought also, there’s a good chance that you were wrong! While the policy appears to be activated by this event, the one single word, “occurrence”, throws a wrench in the whole thing.
Currently, Commercial General Liability policies define an “occurrence” as an accident, including continuous or repeated exposure to substantially the same general harmful condition.” (CG 00 01 04 13 at 15.)
So, you could actually, rewrite Section I. b. (1) of the coverage to read that “this insurance applies . . . only if: the “bodily injury” . . . is caused by an accident . . .”. As a result, the insurer must decide whether the victim’s claims were the result of an accident or not.
Now, common sense says that the shooting itself was certainly no accident. But the question could also become whether or not the shooting was an accident from Cinemark’s point of view.
Much of the industry goes with the thinking that whether or not an occurrence is the same as an accident, is something determined solely from the standpoint of the insured, without reference to the actually injurious conduct. Nationwide Mut. Fire Ins. Co. of Columbus v. Pipher, 140 F.3d 222, 226 (3d Cir. 1998)
Another way to say it is that the test of whether the injury or damage is caused by an accident must be determined from the perspective of the insured and not from the view point of the person who committed the injurious act.
So, it is the intentional conduct of the insured, which would void coverage, not any action by a third party. In this situation, at least, the allegations against Cinemark are reflective of an injury or injuries that were not intended, from the standpoint of Cinemark.
There is much more to this whole case, but our only purpose here was to point out the problem currently existing with commercial general liability coverage and that separate active shooter coverage is the only way to be certain that your business will remain strong even while coming back from being unknowingly victimized.
Always consult your independent insurance agent, for the most up-to-date coverage information and prices for active shooter insurance.