Come out, come out wherever you are: a primer on finding missing policies
If your company ever faces claims that go back a number of years or even decades, as often is the case with latent injury claims, your company may have old insurance policies that provide coverage for such claims. But those old policies probably are not sitting on the corner of the risk manager’s desk, in pristine airtight plastic envelopes, marked “open in case of emergency.” Instead, it will probably require some effort to locate the old policies.
What follows are some notes on how to proceed if your company has information suggesting that it had policies that could cover the claims at issue, but has been unable to locate the policies. Assuming that your insurance company has denied coverage on the basis that you have not located the policies, and there is coverage litigation pending, consider the following suggestions:
(1) Start out with document requests to your insurance company, including requests for:
(a) The insurance company’s standard form insuring agreements and policy jackets for policies of the type you believe the insurer sold and from the years in question;
(b) All other policies that the insurance company sold to your company;
– Keep in mind that other policies may reference the missing policies.
– Also review any policies excess to the missing insurance company policies, as they often list the policies to which they are excess.
(c) The insurance company’s claims files for all claims involving your company;
(d) The insurance company’s underwriting files for your company;
(e) Any audits that the insurance company performed for your company;
(f) Any certificates of insurance for your company that the insurance company has;
(g) The insurance company’s document retention or destruction policies or manuals in effect at any time from the date of the missing policies through the present;
(h) A search of all of the insurance company’s electronic evidence/data/computer systems for “[your company]” and production of any other records that mention policies that the insurance company sold to your company;
(i) The insurance company’s loss runs for your company;
(j) The insurance company’s bordereaux for your company;
(k) Documents that the insurance company exchanged with its reinsurers, including correspondence and facultative reinsurance policies for your company (because the insurance company may have put its reinsurers on notice of claims under the lost policies); and
(l) The insurance company’s reserves for your company’s account.
– As production of reserves is a hotly contested issue, you may consider hedging by limiting your reserves discovery requests to allow the insurance company to redact amounts of reserves, but requiring production of documents that reflect whether the insurance company set reserves for the missing policies.
(2) Also use interrogatories that ask:
(a) Where and what the insurance company searched to locate your company’s policies;
(b) The insurance company’s loss history for all policies for your company; and
(c) The policy numbers, policy periods, and limits that the insurance company admits that it has for your company.
(3) Notice a 30(b)(6) (or its state court equivalent) deposition that would include the topics above.
(4) Consider issuing requests for admission asking the insurance company to admit that it cannot refute what evidence you do have. For example, if you know of the policy prefix, ask the insurance company to admit that it used that policy prefix during the time period in question.
(5) Talk to and/or subpoena all of your company’s past brokers of whom you are aware. If possible, get witnesses to sign affidavits as soon as possible, with as much detail as the witnesses recall regarding the purchase of policies, the coverage, the limits, and any other salient details.
(6) Consider issuing third-party subpoenas to other entities. For example, if you find evidence of other insurance companies’ policies that reference the missing insurance company policies, consider subpoenaing those companies; they may have copies and/or additional evidence relating to the missing insurance company policies.
(7) Don’t forget to search your own company, even if you or others have looked before. Try:
(a) Sending out a companywide e-mail asking for evidence of the policies. Think about adding a small cash bonus for anyone who comes up with evidence of policies. Perhaps you have heard the story about a company that had missing policies, and after offering a cash reward, a longtime secretary found the policies that were worth millions;
(b) Contacting accountants to review historical financial records; accounting reports may identify the insurance that the policyholder had for a particular year or have analyzed sales to figure out how the premiums were set;
(c) Searching any of your company’s former locations. If your company has moved offices over time, policies may remain in the old locations. Consider the story of another company that found insurance policies in an old leather suitcase in the bottom drawer of a file cabinet, left behind in an old company warehouse.
(8) Consider contacting an insurance archaeologist; such firms specialize in locating lost policies.
(9) Consider hiring an expert to offer testimony as to how the market worked in the time period in question, and why the evidence you have supports a finding of coverage in your favor.
(10) Consider evidentiary issues relating to any documents that you do find. Trial lawyers know that it is not what documents you have, but which ones get admitted into evidence.
Overall, locating missing policies requires a bit of detective work. When considering the ultimate payoff that such policies may offer, it will be worth the effort.
This was posted originally at Lexis Insurance Law Center.
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