Renewing Product Liability Coverage? Consider the Number of Occurrences

James S. Carter

Carter, James S.Many companies at this time of year are preparing to renew their product liability coverage, which is supposed to provide security for products lawsuits.  The insurance policy that a company is considering for its products liability coverage, however, may leave the amount of coverage for product liability losses up to chance because of an issue that arises in insurance coverage litigation, particularly those involving product liability claims, known as the number of “occurrences.”  Simply put, the number-of-occurrences issue asks whether product liability claims arise from one occurrence or more than one occurrence.  Because the amount of coverage or any deductible is typically stated as a dollar amount “per occurrence,” the answer to that question can leave a policyholder with an abundance of coverage, or leave it essentially self-insured.

The number-of-occurrences issue can have a particularly profound effect on insurance coverage in the product liability context because of the potential for numerous claims.  If, for instance, a policy has a per-occurrence deductible, and each product liability claim is deemed to be a separate occurrence, the total amount of deductibles could exceed the total amount of coverage.  Alternatively, if product liability claims are grouped together as one occurrence, then only one deductible would have to be paid, thus preserving coverage. Continue reading “Renewing Product Liability Coverage? Consider the Number of Occurrences”