The Liability Insurance Crisis of the 1980s; What's an Accident, Anyway?

We're hosting a webinar on Thursday, September 1 at 11 AM titled An Introduction to Captive Insurance.  You can sign up at this link.

We formed and operate the first series LLC in Montana (named Aegis) for captive insurers.  Several other firms provide key services such as accounting, audit and actuarial work.  Please contact us at 832.330.4101 if you'd like to discuss forming a captive for your company  

   As I noted last week, there were several historical trends that led to the insurance crisis of the 1980s.  Perhaps the oddest was the legal debate about the definition of “accident,” which was the triggering event of the first several post-WWII commercial general liability policies.  Insurance companies argued that an “accident” was a short duration event, like an auto accident.  Policy holders argued an “accident” took longer – up to 9 months or a year.  For example, an insured would argue that an employee injured by continuous exposure to a chemical had endured an “accident” within the terms contemplated by the policy. 

   The following excerpt, which explains some of this debate along with its historical context and eventual resolution, is from “The Rise and Fall of Commercial Liability Insurance” by Kenneth S. Abraham, Professor at the University of Virginia: