Under “Occurrence Based” CGL Policy, Occurrence and Injury Must be Within the Policy Period

In Zack v Westfield Ins Co, unpublished opinion per curiam of the Court of Appeals, issued June 11, 2019 (Docket No. 343732), the panel found no duty to defend or indemnify where the underlying claim was based on an occurrence during the policy period, but there was no injury until after the policy had been cancelled.

The decision underscores that although the duty to defend is broader than the duty to indemnify, “[t]he duty to defend is related to the duty to indemnify in that it arises only with respect to insurance afforded by the policy.” American Bumper & Mfg Co v Hartford Fire Ins Co, 452 Mich 440, 450 (1996). “If the policy does not apply, there is no duty to defend.” Id.

The opinion also underscores the difference between “claims made” and “occurrence based” coverages. Had this been a “claims made” policy, the lack of coverage would have been obvious since the underlying Plaintiffs did not learn of the alleged “occurrence” until months after the policy period. But because this was an “occurrence based” policy, a closer look at the underlying complaint allegations was required.

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