An employee of the insured's warehouse stole over 500 cylinders of Freon from a warehouse customer during a period of six months. Does this constitute one or multiple occurrences for the purpose of assessing the property damage deductible(s)? Under our general liability policy, "occurrence" means an accident, including continuous or repeated exposure to substantially the same general conditions.

The insured and customer did an inventory and found minor shortages, then six months later during a second inventory found major shortages. We feel at least two deductibles apply. Do you agree?

Iowa Subscriber

Most courts today apply the cause test in which all losses arising out of the same source are treated as one occurrence. And, most courts say that property damage arising out of continuous or repeated exposure to substantially the same general harmful conditions is considered as arising out of one occurrence. So, it is our opinion, that since the same source of the losses was the employee and since there was a continuous and repeated exposure to the same general conditions, that is, the same employee working at the same location, and stealing the same items, this should be considered one occurrence.

However, since courts can vary in their interpretations of policy language, you might want to ask an attorney who is familiar with the court opinions in your jurisdiction to see how the courts there have ruled on this subject. Court rulings take precedence over our opinions, of course, but our opinion in this instance is that there is only one occurrence and so, one deductible.

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