Posted on Tuesday, August 11, 2015Today’s climate of corporate mergers paired with conservative document retention policies often results in lost or destroyed insurance policies. This proves problematic when companies are unexpectedly faced with long-tail injury claims, e.g. asbestos and environmental claims.
The good news is that the absence of a physical policy does not bar policyholders from securing coverage. The bad news, however, is that the onus to prove that the policy existed and what its terms were does fall on policyholders’ shoulders. Policyholders may consider standard industry forms, testimony from their insurance brokers or risk managers, certificates of insurance, and/or their accounting records in attempting to prove the existence and terms of a missing policy. Whether the evidence will be sufficient will depend on the court’s evidentiary standard of proof, which is either “a preponderance of the evidence” or the more stringent “clear and convincing evidence” standard.
Nonetheless, policyholders should not be discouraged from pursuing coverage under a missing policy due to a lack of direct evidence. This is because a claim’s sufficiency is determined under the less exacting plausibility standard, for which the First Circuit recently held in Cardigan Mountain School v. New Hampshire Insurance Co. that circumstantial evidence is sufficient to get a lost policy claim past the initial pleading stage and into discovery, where the policyholder can ultimately secure further evidence to make its case.
For a full version of the First Circuit Decision click here: Cardigan Mountain School v. New Hampshire Insurance Co., 787 F.3d 82 (1st Cir. 2015). You will need a LexisNexis subscription to use this link.
