Many liability policies are triggered when an event giving rise to a covered claim occurs, rather than when the claim is asserted or filed with the court.  This is often true of the most common type of liability coverage - the commercial general liability policy.  For instance, a claim brought by a plaintiff against you now might be for an accident that occurred two years ago.  If that happens, it will be your liability policy from two years ago that applies (to provide you with a defense and to pay any settlement or judgment), not your current policy.  In some circumstances, policies issued twenty, thirty and even more than forty years in the past may be triggered, if a claim asserted against you currently is based upon an event that occurred in years prior.  This happens fairly frequently in asbestos claims because the injury may not manifest itself until many years after the exposure took place.

So, what happens if you know that you had insurance coverage back when the incident giving rise to a claim occurred, but you no longer have that policy or the declarations?  A recent decision (May 27, 2015) from the First Circuit Court of Appeals offers a helping hand to every policyholder that has ever had trouble finding a copy of the policy.  In Cardigan Mountain School v. New Hampshire Ins. Co., the First Circuit Court addressed a claim for insurance coverage based on a lawsuit filed recently, with claims that the occurrence giving rise to the lawsuit first took place in 1967 and 1968.  The school no longer had the policies, and did not even have a written record that New Hampshire Ins. Co., or its predecessor, provided coverage in 1967-68.  Nonetheless, the school did discover a financial statement and an auditor's report dating back to the early 1970's that indicated that the school was covered by a $1 million general liability policy from the named insurance company in 1970 and 1971.  The school also produced sworn testimony from its former business manager who said that he was certain that the school had the same coverage during his tenure from 1967 to 1970, which encompassed the timeframe when the acts allegedly occurred.  

The First Circuit determined that this was sufficient information to establish that a policy with New Hampshire Insurance Company had existed at the time of the occurrence, and denied the insurance company's motion to dismiss the claim.  

Practical Advice
Our Insurance Group has long advised clients to keep copies of general liability policies FOREVER.  But, even if you don't have the space to keep those insurance policies on record forever, it is a good idea to at least keep a record of the name of the insurance company, policy number, type of policy, and amount of coverage on a memo or spreadsheet that you can keep forever.  This recent court decision demonstrates the importance of maintaining at least some record of insurance coverage indefinitely.  One never knows when a claim will be asserted almost fifty years after the fact.