Commercial general liability insurance policies are extremely valuable to businesses facing third-party liability claims, even where the policies are decades-old and their express coverage periods have expired. Particularly in the case of “long-tail” liability claims that involve a continuous or repeated injury over long periods of time (e.g., asbestos exposure, environmental contamination), historical policies may provide coverage where current policies do not.
When asbestos personal injury lawsuits proliferated in the early 1980’s, countless American companies found themselves literally searching their offices for old policies that could provide coverage. This commercial need gave rise to a cottage industry known as insurance archaeology – the reconstruction and analysis of historical insurance coverage.
While many companies that were repeatedly sued in asbestos or environmental litigation undertook insurance archaeology projects by the 1990’s, the same cannot be said for a growing number of companies now being named in these lawsuits for the first time as the field of solvent defendants continues to shrink. Moreover, just as manufacturers may not have anticipated the magnitude of asbestos and environmental litigation before the 1980’s, it is difficult to predict what category of products might be the “new asbestos” 15 years from now.
Ideally, businesses would have detailed records of historical coverage, along with complete policy copies, in a readily accessible location known by key personnel. Unfortunately, this is rarely the case in practice, but even if a company cannot find copies of its historical policies, a methodical review of secondary evidence might still unearth available coverage. Third-party specialists can coordinate this work, but a company can find valuable leads on its own. This is where archaeology comes into play – knowing what to look for and where to find it.
Businesses can often find evidence of historical insurance coverage through some combination of the following steps:
1. Reach out to insurance brokers. Companies both large and small generally purchased insurance through outside brokers who assisted the company in identifying what coverage was needed and the carriers best suited to offer it. Because their business is essentially customer service, brokers often maintain records of policies they placed, and a helpful broker with good records will be the best resource for reconstructing coverage.
2. Consult past management. Former management personnel who had risk management responsibilities are another valuable source of information. Before businesses employed designated risk managers, insurance procurement was often the job of the corporate treasurer or secretary. Even a retired officer’s vague recollection that the company “always used Travelers” is a good start.
3. Revisit past claims. If the company previously faced any third-party liability claims (e.g., workers’ compensation, construction defects, or even a slip and fall on the company’s sidewalk), internal files for those claims might identify then-current coverage.
4. Dust off the old ledgers. Archived accounting records like payment ledgers will frequently track annual premium payments made to carriers or brokers, sometimes even with references to the policy numbers and policy periods in question.
5. Review contract files. Old contracts can generate leads on historical coverage in several ways. Contracts under which the company acquired or divested of substantial business assets or even subsidiary entities will often include schedules of coverage, and even if the agreement itself does not identify coverage, a due diligence file on the transaction might. Agreements with suppliers, distributors, and/or subcontractors also may have required the company to provide its business partners with a certificate of insurance that identifies key details of the subject policies. Similarly, if the company ever did business with federal, state, or even local governments, those agencies often required proof of insurance as a matter of course.
If a business faces a claim where the alleged conduct dates back into the company’s history, or even if a company wants to compile its historical coverage before secondary evidence has been lost, there is no time like the present to take these steps. In either case, digging up the details of historical insurance coverage is a critical first step in minimizing the company’s direct exposure and securing valuable coverage that may be far more than just a thing of the past.