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Doing insurance archeology for fifteen years, I have noticed that a good percentage of our clients don’t understand why the insurance companies just won’t reveal their policy histories when asked. I usually remark that if the insurers just volunteered insurance information, guys like me would not have jobs. However, I also am usually asked two related questoins: (1) “Does the insurance company have a duty to disclose coverage?” and (2) “Since insurers keep old policy files, why don’t they voluntarily do policy searches for their insureds?”

Regarding the duty to disclose coverage, I always refer them to an attorney practicing law in their state. That is because the courts differ regarding whether duties to disclose exist and what triggers the duty if there is one. Some courts find the insurers have legal duties to disclose and othersfind ethical duties to disclose. Where courts have been asked to find the insurer has an affirmative duty to explain all coverages under a policy, they have often found to the contrary. Some find a duty in the insured’s reliance on documents produced by insurers that discuss its “commitment to policyholders.” Some courts discuss how insurers are bound by ethical claims-handling practices to disclose potential coverage to their insureds.

Regarding the voluntary searches through insurer policy files, courts and legislatures havelong required that the policyholder asserting coverage prove the existence of the policy as well as its terms and conditions. Most everyone finds that this is reasonable because otherwise policyholders and their attorneys could send records requests to every insurer possible and the law would require that each insurer do policy searches. The result would be thousands of lost hours on wild goose chases. Once the insured has proved the existence, terms and conditions of the policy however, state courts will often require that insurers search for the old policies. Knowing this, insurers often do the policy searches once adequate evidence has been presented to them.

You will want to contact your attorney about the law in your state. But given the realities that insurers very often are not required to disclose policies without adequate proof of coverage by insureds, an insurance archeologist comes in handy. The price of pulling together the documents required to prove coverage existed is a small expense when compared to voluntarily paying damages without insurance.

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