One of the very first steps in every insurance coverage case, large or small, is obtaining a copy, preferably certified, of the applicable insurance policy. It's also often one of the hardest and most time-consuming steps, even for a recent loss under which coverage of only a single policy is triggered.
In occurrence-based policies, every policy that was in effect during a loss potentially provides coverage. In long-tail losses such as environmental or asbestos claims where the exposure took place over decades, it is sometimes difficult to identify what insurer issued the policies for each year, much less to obtain a copy of them.
Not surprisingly insureds frequently have no idea what insurer provided coverage to them fifty years ago. And if you go back far enough, even if an insured knows the name of the insurer, it can be difficult to determine the applicable policy forms. Some cases address whether it is acceptable to make an educated guess as to the terms of the policy.
In House of Clean, Inc. v. St. Paul Fire & Marine Ins., Co., __ F.2d __, 2011 WL 1321197 (D. Mass), the United States District Court for the District of Massachusetts held that the insured bears at least some responsibility for knowing what policies were historically issued to it.
House of Clean operated a dry cleaning business from 1967 to 2007. In 2005, chemical pollutants used in the cleaning process were detected in nearby soil and groundwater. Neighbors sued and the Department of Environmental Protection issued a notice of responsibility. House of Clean sought coverage from its insurer, St. Paul. When a coverage dispute arose, it sued St. Paul for declaratory judgment and breach of contract.
House of Clean subsequently sought to amend its complaint. One of the new allegations was that during discovery, St. Paul provided over 10,000 pages of disorganized documents which included two insurance policies from 1981-1982. House of Clean had been previously unaware of those policies. It sought to amend the complaint to add allegations of coverage under those policies.
The court denied House of Clean's motion to amend the complaint. It held that the motion to amend was untimely given that it would require the addition of two new defendants (insurers related to St. Paul). It stated, "The Court acknowledges that HOC was unaware of those policies before October, 2010, but notes that it bore at least some responsibility for maintaining records of insurance policies it had purchased."
The lesson: Keep full copies of your occurrence-based insurance policies forever. Really, forever.