72 hour clauses/occurrence definition explained

04 October 2019

In this regular feature we take a look at common clauses found in Energy Insurance that are often not well understood and try to look at what their intentions are, and what they cover or exclude.

In this article we look at 72-hour clauses/occurrence definitions. We have provided a general overview from our experience and encourage you to read the terms and conditions of your particular policy.

Insurance policies typically require there to be an ‘Occurrence’ to trigger a loss under the policy. The policy limit and the policy deductible or retention will also normally be referenced as ‘per Occurrence’ or ‘each Occurrence’ (although in some policies it can be aggregated over the policy period).

In the event that a covered event may result in a number of individual losses it is important that the policy is clear and unambiguous as to how the limit, deductible or retention applies to those individual losses. Therefore policies will usually contain a definition of the word ‘Occurrence’ and that definition will normally include, within the definition itself or as a separate clause, a ’72-hour’ provision.

A typical Occurrence definition will state that “the term ‘Occurrence,’ wherever used, shall mean one loss, accident, disaster or casualty or series of losses, accidents, disasters or casualties arising out of one event.”

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However where weather related events (such as windstorms) occur over a period of time causing several losses, it is often not possible to determine whether damage caused was from one event or from multiple events. Therefore a 72 hour clause will allow the aggregating of all losses within a 72-hour period commencing during the policy period that arise from “windstorm, all tornadoes, cyclones, hurricanes, similar storms and systems of winds of a violent and destructive nature, arising out of the same atmospheric disturbance” to be treated as one event.

Similarly, an earthquake or volcanic eruption can result in several separate earthquakes or eruptions where it may not be clear whether damage was caused by one of the quakes or eruption, or by two or more quakes or eruptions. Again, there will usually be a 72 hour clause that aggregates all losses arising from more than one earthquake, shock or volcanic eruption within a 72-hour period commencing during the policy period to be treated as one event.

Whilst the 72-hour provision is normally limited to Windstorms and Earthquake/ Volcanic eruptions, some policy wordings will also include the perils of Hail, Strikes, Riots & Civil Commotions; Flood or Storm Surge.

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  • John CooperJohn Cooper

    John joined JLT in 1987 having spent three years with Leslie & Godwin (now Aon) in the Marine Hull Technical Department.

    John gained extensive knowledge in the technical design and servicing of energy related insurance programmes covering physical damage, business interruption, control of well and liability exposures for a wide spectrum of energy clients including oil & gas lease operators, mobile rig contractors, oil & gas service companies, and major integrated oil companies.

    At JLT Risk Solutions John sat on the "Energy Executive Committee" that oversaw the management and strategy of the Energy Business Unit. In January 2005 John moved from JLT Risk Solutions to Lloyd & Partners where he has responsibility for managing the Energy team. He sits on the Energy & Marine Executive Committee and is a strategic advisor to the LPL Board.

    He is also a broker consultant representative to the London Joint Rig Committee and has worked on a consultancy basis with Oil Insurance Limited (OIL). In the combined Marsh JLT Specialty, Energy and Power team, John now performs the role of Global Chief Client Officer.

    If you would like to talk about any of the issues raised in this article, please contact John Cooper, Global Chief Client Officer on +44 (0)20 8108 9542.

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Services provided in the United Kingdom by Marsh JLT Specialty, a trading name of Marsh Ltd and JLT Specialty Limited (together “MMC”). Marsh Ltd is authorised and regulated by the Financial Conduct Authority for General Insurance Distribution and Credit Broking (Firm Reference No. 307511). JLT Specialty Ltd is a Lloyd’s Broker, authorised and regulated by the Financial Conduct Authority for General Insurance Distribution and Credit Broking (Firm Reference No. 310428).

This is not legal advice and is intended only to highlight general issues relating to its subject matter. Whilst every effort has been made to ensure the accuracy of the content of this document, no MMC entity accepts any responsibility for any error, or omission or deficiency. The information contained within this document may not be reproduced. If you are interested in utilising the services of MMC you may be required by/under your local regulatory regime to utilise the services of a local insurance intermediary in your territory to export insurance and (re)insurance to us unless you have an exemption and should take advice in this regard.