Author: VU Faculty

The insured is sued for damages arising out of an occurrence that took place many years ago. The insured is unable to find the policy in force at that time, so the insurer says they won't respond. What do you do when a policy is lost?

"We have an insured with a claim arising out of occurrences that took place in the late 60's and early 70's. We have received a copy of a letter that the carrier sent to the insured that reads in part:

"If you have copies of the alleged policies, please forward them to us immediately. While we will continue to cooperate with you in an effort to locate documentation of the alleged policies, pleased be advised that it is the burden of the party seeking benefit of an insurance policy to prove both its existence and provisions. Until the existence and provisions of the alleged policies are proven through satisfactory written evidence, we cannot undertake any action whatsoever on behalf of (insured named) in regard to this matter under the alleged policies.

"Isn't this why insurance companies micro-fiche their files? Is the insured ultimately responsible for providing these copies? Your prompt attention would be appreciated as we have to reply now to the insurance company."

As a general rule, yes, it is the responsibility of the insured to demonstrate that a policy or policies existed. If it's reasonable certain, even from circumstantial evidence, that the insurer was the insurer at that time, we'd like to think that the insurer has some obligations to assist in the search...if not legally, at least ethically.

Also, the agency, from both E&O and customer service perspectives, should keep an archived copy of policies indefinitely. It is probably not necessary to keep a copy of every policy of every insured, as long as you keep a sample copy of each form edition. For example, if you have dozens of insureds covered under a company's proprietary policy, you could retain one copy of that policy as long as the Dec. page or customer file accurately identifies that policy edition. For more information on general record retention schedules, click here.

Here are some quick responses from our faculty, then we'll explore this situation in more detail.


I recall several years ago that an agency insured a pharmacy which was sued, based on an occurrence fifteen years earlier. The current agency was not the agency at the time of the occurrence...that agency had been purchased by the current agency.

In the agency's current customer file, they did have a document that mentioned who the carrier was at that time, but no daily report or any other information. When the insurer was contacted, they said, "We don't keep records that far back." (Yeah, sure.) Basically, the company was unresponsive and took the position, "Prove it."

Luckily for the insured, the agency finally found evidence of the policy (but not, of course, the policy itself) in some dead files that were in storage. It was a huge and timely undertaking, but they came through for the client and the company (grudgingly, I presume) tendered a defense and settled the claim within limits.


We have actually done some historic reconstruction of insurance programs. We have dug and dug through dusty basements to pull insurers who shall remain unnamed into old Superfund claims. This is not fun work but can be done. You can bet the old policies will not turn up unless someone besides the insurer produces some evidence of coverage.


And what are the procedures for an agent to maintain liability files? I once traced billing records for some liability policies back to 1939. As soon as the insurance company received copies of the payments, the policies magically appeared in their files. My, my, my. [Editor: For recommended agency record retention schedules, check out this document.]


I have traced several policies back for years, and one almost fifty years. Invariably, the insurance company "finds" their files when you submit evidence.

In the March 2007 issue of the "Agent & Broker Solutions" newsletter published by the CPCU Society, Jerome Trupin, CPCU, CLU, ChFC wrote about ACMAT Corporation v. Greater New York Mutual Insurance Company, No. 25099, Appellate Court of Connecticut, April 12, 2005, Atlantic Reporter 2d 1254. The case involved asbestos exposure claims dating from the 1960s. According to Jerry's account, "The insured was unable to locate a copy of the policy but did find a certificate of insurance showing coverage for the 1965 year. The insured also presented other evidence, including testimony from the agent who wrote the policy that he had obtained coverage for the insured from the insurance company, a statement from a former employee of the insurance company that he recalled issuing the policy, and documents from 1967 and 1968 dealing with the transfer of coverage from the insurance company to another insurer." The appeals court decided against the insurer based on this preponderance of evidence.


Try PolicyFind and check out these IRMI articles. 

Insurance Archeology Group and R.M. Fields, International provide these kinds of services. They are consultants who rebuild historic insurance coverage. I can tell you that APH claims are still coming in from the 50's and 60's. The burden does lie with the insured.

To locate a lost life policy, go to www.mib.com/lost_life_insurance.html, download the form, complete it, and mail it in with a check for $75. In cases where companies buy out other companies, etc., this service can track the lineage and determine which company now has the policy. The ACLI (American Council of Life Insurers) used to maintain a database of lost/unclaimed life insurance proceed, but they stopped doing that several years ago. They now refer all such inqiries to this website. According to ACLI, this online service is pretty good too.

As a side note as to disposition of unclaimed funds, in situations when a life insurance company is not able to dispose of policy proceeds (unclaimed benefits, nobody ever files a claim, etc.), or in the case of demutulization when the policyowner is not able to be located, the companies will hold the funds in escrow until such time that beneficiaries are ultimately located. 

As indicated above, the insured usually has the burden of proof in establishing that a policy existed and the basic terms, while the carrier has the burden of demonstrating exclusionary provisions. The insured does not necessarily have to produce the actual policy. In general, if a diligent search does not produce the policy, but does produce secondary evidence, a majority of courts appear to take the position that coverage may be established by a preponderance of evidence.

For example, the insured can use testimony of employees, correspondence and notes, accounting records, daily reports, certificates of insurance, internal carrier documents, etc. More information on this approach can be found in the article, "The Paper Chase: Locating and Leveraging Value of Past Corporate Insurance Policies."

From the standpoint of litigation on this issue, this article discusses several cases. More recently, attorney Randy Maniloff, who is a frequent contributor to the VU, published his Top 10 Insurance Court Cases of 2002. Included was  case #6:  Dart Industries, Inc. v. Commercial Union Insurance Company, 28 Cal. 4th 1059, 52 P. 3d 79 (2002).

Dart Industries, Inc. v. Commercial Union Insurance Company has nothing to do with asbestos, but will likely end up making the most noise in that arena. In Dart, the Supreme Court of California examined what an insured must prove in order to establish its rights under a lost or destroyed insurance policy. The dispute involved CGL policies that were allegedly issued to Rexall Drug Company, a predecessor to Dart Industries. Dart was one of several pharmaceutical companies that manufactured and marketed DES, a synthetic estrogen used to prevent miscarriages.

Dart was named as a defendant in actions brought by adult women whose mothers had ingested DES while the claimants were in utero, and who, when they reached child bearing age themselves, developed precancerous and cancerous lesions as well as deformities of their reproductive organs, resulting in infertility or miscarriages.

Following settlements with certain of its insurers and a lengthy procedural history, the issue that made its way to the Supreme Court of California was whether Dart was entitled to defense and indemnity under a lost policy issued by Commercial Union from September 1, 1946 to September 1, 1951.

The Dart court held that a claimant seeking coverage under an insurance policy that has been lost or destroyed without fraudulent intent on the insured’s part has the burden of proving: (1) the fact that it was insured under the lost policy during the period in issue, and (2) the substance of each policy provision essential to the claim for relief. The insurer has the burden of proving the substance of any policy provision essential to the defense.

The Dart court held that there was sufficient evidence to support the trial court’s finding that the policy in question covered injuries arising from DES ingestion during the policy period, and that, therefore, Commercial Union had a duty to defend and indemnify Dart. In reaching this decision, the Supreme Court of California reversed the decision of the California Court of Appeal, which had held that Dart must prove the material provisions of the policy by introducing evidence of the specific language used in those provisions. Instead, the supreme court adopted the following requirement for insureds that are seeking coverage under a lost insurance policy:

When, as here, it is undisputed that there was an insurance policy covering the relevant time period and that the policy was lost in good faith and not recovered after diligent search, there is no reason either in the law of contract or of evidence why secondary evidence that attests to the substance but not the precise language of an insurance policy should be insufficient as a matter of law to establish the insurer’s contractual obligations.

While an important issue in many lost policy cases is the court’s determination of the proper burden of proof — “preponderance of the evidence” or “clear and convincing evidence” — such issue was not before the supreme court in Dart. The supreme court was constrained to apply a preponderance of the evidence standard, on the basis that it was the law of the case.

There is no question that when it comes to securing coverage under a lost insurance policy, the Supreme Court of California adopted a less stringent standard than did the Court of Appeal. While Dart has been hailed as a significant victory for policyholders (the case was the subject of a front page story in Business Insurance), the court noted that it was precluded from examining the appropriate burden of proof and substituting its own determination of the credibility of Dart’s key witness for that of the trial court.

Dart’s real significance will likely come into play in the asbestos context. As has been widely reported, the bankruptcy of large asbestos defendants has caused the need for plaintiffs to cast a wider net in their search for new asbestos defendants. Thus, many companies, usually smaller ones, are for the first time seeing their names on an asbestos complaint. First order of business for these new defendants will be to attempt to compile their complete coverage history. Given that this could mean finding policies dating back to the 1940’s and 1950’s, it is virtually inevitable that many of these new defendants will be confronted with lost policy issues (and their insurer likely telling them that the burden is on the insured to prove the policy).

While there are lots of ancient cases that address lost deeds, wills and notes, lost insurance policy case law from the modern era, and especially from state supreme courts, is not overly abundant. Thus, Dart, coming from the Supreme Court of California, is likely to be cited in many future lost policy disputes. And, while the Dart court was forced by the law of the case to apply a “preponderance of the evidence” standard, it is possible that, over time, that procedural nuance may get lost, leaving policyholders to erroneously contend that, in a lost insurance policy case, the Supreme Court of California held that a preponderance of the evidence standard applies.

Incidentally, another important lost policy-related decision in 2002, but with much less fanfare than Dart, was Security Insurance Company v. Lumbermens Mutual Casualty Company. In Security Insurance, a Connecticut trial court held that pro-rata time on the risk was the appropriate method for allocating both defense and indemnity in the context of numerous asbestos bodily injury claims that triggered several successive years of policies as a result of a continuous trigger. Most significantly, for allocation purposes, the court required the insured to stand for several triggered years in which it had allegedly purchased insurance, but had lost or destroyed the policies.

In 2002, the Connecticut Supreme Court agreed to hear Security Insurance v. Lumbermens Mutual. making it perhaps the first supreme court to address the specific question whether an insured’s obligation to stand for uninsured periods applies to long-expired policies that the insured can no longer locate. In other words, is the allocation outcome different when the insured can not locate a long-expired policy, as opposed to an insured that made a conscious decision not to purchase insurance?

Related article: "Do Agents Need to Archive Policies?"

Note: In a recent TechTip, Steve Anderson (www.steveanderson.com) mentions another service:

http://www.policyinspector.com/

Last Updated:  May 12, 2014
February 6, 2014