The business owner was defending against claims by the state environmental authorities that his operations contaminated the groundwater beneath his former plant site with chlorinated solvents over a period of twenty years in business. His attorney explained that the business owner would have to comply with the states requirements and hire an environmental engineer to investigate and possibly remediate the environmental property damage.  He estimated the cost of these services in his state at approximately $300,000. The attorney suggested to him that his old business insurance policies might provide coverage for the damages and even apply to the attorney’s fees.

The business owner conducted a search for his old policies and was disappointed to learn that boxes of what his controller had considered “expired insurance policies” had been trashed during the move to his new plant. The controller had come up with some old insurance company audits but no policies. The business owner then called his former insurance agent, the one who he recalled provided liability coverage back in the years the old plant was functional. Sadly, he learned that his former agent purges the records of former clients every five years and so has retained no information.

A call back to his attorney, however, offered a glimmer of hope. It seems that the attorney had been down this road once before with a dry cleaner who had lost his policies but had retained some business records. The attorney had learned that the rule in these matters was that the policy holder must prove the existence of the old insurance policies and the nature and terms of coverage. He advised that it didn’t always take an insurance policy to meet this burden of proof. In many instances, a collection of business records identifying the right policies for the right policy periods would suffice. The attorney suggested getting an insurance archeologist involved to locate more and better insurance evidence. Even if the archeologist did not retrieve policies, he would likely acquire enough insurance evidence to identify the carriers and coverage so that a claim could be filed.

The insurance archeologist went to work and discovered some declarations pages, a certificate of insurance, a workers’ compensation claim file and some invoices from the former insurance broker. Using these documents, the archeologist was able to reassemble much of the missing liability insurance history for the business owner’s company. That is because the worker’s compensation claim file identified the coverage as only one part of a package policy that had also included general liability coverage. The declarations pages listed policy numbers and identified the endorsements to the policy. The archeologist was able to supply copies of these endorsement forms so that the attorney could examine the policy’s pollution exclusion. The insurer’s audit further identified coverages, classifications and premiums.  The insurance certificates’ issue dates proved that the policies were still in existence a year or later into the policy periods. Assembling these pieces, the archeologist recreated several years of the business owner’s company’s historical schedule of insurance and with this schedule, the attorney was able to file claims with the appropriate carriers for the appropriate policies over the dates of coverage.

The point of the story is that it doesn’t take a policy to prove insurance coverage. Although the policy is the best evidence, various business records can create an array of evidence that suffices to inform the insurance company that the policy holder has all the evidence it needs to convince the reasonable person that the right kind of coverage was in place on the dates the environmental damage is alleged to have occurred. Once the insurer has this information, it can determine what a court of appropriate jurisdiction would be likely to rule concerning the sufficiency of this evidence and act accordingly. In many cases, the insurer will see that the case for existence and terms of coverage has been made using less than full policy evidence and conduct an internal search for the actual policies under which to defend and indemnify the business owner.