Thursday, November 3, 2011

Keep your policies forever

I can't say it too often: Keep copies of your insurance policies, forever, in a place you can find them. If at the beginning of your policy year your insurer or agent sends you only the coverage selection (or "declarations") page -- the page that summarizes your coverages -- ask for a copy of the entire policy. Do it immediately or you may never get it. And when you get it, make sure that the policy forms and endorsements provided match the forms and endorsements listed on the coverage selection page.

In almost every insurance coverage dispute I have ever been involved with, whether on the side of the insurer or the insured, the first challenge is obtaining a copy, preferably certified, of the policy. Whichever side I'm representing, it generally takes months.

Don't just keep your most recent policy. Keep all of them. For decades. Forever. If you have an occurrence-based policy and get hit with a Superfund suit -- say a property you owned for five years in the early 1990's has been discovered to be a site of toxic waste -- there might or might not be coverage under policies issued for each year that you owned the property. If the policies differed from one year to another, even if issued by the same insurer, there may be coverage under one year but not others.

Chances are that if the policies were issued not too long ago the insurer can, eventually, provide or recreate a copy. But at some point old documentation, especially but not exclusively from before the advent of computers, is lost. Insureds have the burden of proving coverage under a policy. The easiest way to do that is to provide the court with a copy of the policy, not to guess, "When my grandfather owned the company he was friends with an adjuster at Acme Insurance, so . . ."


Van R Mayhall III said...

Nina, as you know, maintaining PDFs of policies is often more economical and sometimes even safer than keeping physical copies, if proper security and back-up procedures are used. Generaly, under the Louisiana Uniform Electronic Transactions Act, if the law requires an agreement to be in writing, an electronic record satisfies the law. Therefore, PDF files and other electronic records are usually sufficient for court evidence. Has it been your experience that this is true in Massachusetts, as well?

Nina Kallen said...

Van, That's a good point. I came of age at a time when computer technology was evolving in such a way that something you thought was safely stored forever -- on a 5 1/4 inch floppy disk, for example -- would be inaccessible three years later. Although I have never researched the issue, I would assume that in most circumstances a printed copy of a policy with the accompanying dec page would be sufficient under the best evidence rule as prima facie evidence of the policy.

Van R Mayhall III said...

There is a Uniform Electronic Transactions Act that was promulgated by the National Conference of Commissioners on Uniform State Laws several years ago. I believe Massachusetts adopted a verison of it in 2003. May be a good idea for a future article. Best.