Looking for an old insurance policy – one your client “was sure” they had but can’t remember where or when? Consider hiring an “insurance archaeologist.”
Who wouldn’t enjoy this scenario: An abandoned commercial property near a city center is used again as a productive commercial location? Or, pollution that seeps into underground water supplies is removed so the water is safe to drink.
There is a feel-good quality about such projects. But public bodies and private businesses are hard-pressed to find the money to pay for reclaiming ground and aquifers. Some municipalities and private businesses turn to a relatively new service called “insurance archeology.” Archeology and insurance archeology both may be defined as a search for the truth about human behavior by finding and documenting material from the past.
There are dozens of commercial insurance archeologists in the United States, which have uncovered billions of dollars in old insurance policies, including some in New Jersey.
My company – PolicyFind – is a digger in the boneyard of abandoned insurance records. Like an archeologist carefully combing through fragmented treasures of the ancient past, we reconstruct liability insurance policies once considered expired. Over the years, case law in various state courts has evolved to revive once-considered-expired general and product liability insurance policies. These lost or discarded policies have the potential to fund costly environmental investigations or pay product liability defense costs, often saving corporate and small business policyholders from economic ruin.
From the Queen Mary to pigeon-infested warehouses, insurance archaeologists have found evidence of insurance coverage in unusual places. They’ve located policies in waterlogged basements, executive washrooms, abandoned filling stations, locked safes, walled-in garage attics and tractor-trailers.
Insurance archeology is a key ally for businesses burdened with long-tail liabilities such as environmental, asbestos and other toxic tort claims. The missing coverage often stretches back for decades. Searching for those old records usually begins with a phone call from an attorney.
One complex project PolicyFind worked on involved locating policies for a Fortune 500 waste transport company that had grown through acquisition of hundreds of smaller locally owned waste haulers. Environmental damage at landfills throughout the country was traced back to these mid-sized waste haulers. Recognizing it now owned liabilities without the necessary insurance assets to fund the multi-million dollar cleanup costs, if faced the challenging assignment of locating hundreds of old insurance policies in dusty files in nearly every state. A small army of investigators was trained and dispatched to small towns across the country to locate documents identifying policies in local government archives. Several hundred office personnel were persuaded to open their files to assist in the project. The end result: Billions of dollars of coverage limits. Using these old policies, counsel successfully negotiated settlements that the Fortune 500 company used to fund site clean-ups around the country.
Discoveries by insurance archeologists have helped clean hundreds of factory sites. Some were abandoned but many were like the scrapyard in Pennsylvania or the manufacturer in Ohio: Longtime bulwarks of their local economies and still in business.
A case in California illustrates another widespread danger of long-tail claims to former owners of mom and pop businesses and the role of insurance archeology in saving them from financial ruin. In 2003, nearly 30 years after selling their dry cleaning business, Bob and Inez Heidinger received a letter from California advising that the dry cleaning solvent they used legally at College Cleaners between 1952 and 1974 had contributed to the contamination of the community’s drinking water. When that bad news came, Bob, 87 and Inez, 83, were decades into retirement.
Daughter Barbara Heidinger says, “We knew they had been insured but we had no proof. We had thrown away their old business records when we cleaned out the attic a few years earlier.” An insurance binder for general liability coverage from the 1980s was found at a firm the Heidingers had done business with 20 years earlier. The lost insurance binder bought some peace and dignity for this family.
Attorneys call on insurance archeology companies for a wide range of cases. Some clients tell their attorneys they face long-tail liability claims for asbestosis and mesothelioma, or similar claims related to products or construction. These “second tier” asbestos defendants are desperately seeking help because many are being increasingly targeted with product liability claims even if they never manufactured asbestos-containing products. Often they are the middlemen: Unlike asbestos manufacturers, they have not been defending these suits for the last 20 years. They are surprised to find they need their historical insurance policies just as the asbestos manufacturers did.
San Francisco attorney Paul Bessette of Brydon Hugo and Parker is defending a California general contractor responsible for handling the conversion of the Queen Mary from a seaworthy ocean liner to a hotel and convention center in Long Beach, Calif. The British luxury liner sailed the seas beginning in 1936. In the late 1960s, it was sold and set anchor in a permanent slip in Long Beach harbor. The conversion was accomplished from 1969 to 1972. Now, heirs of a worker on the project who died from mesothelioma are suing the contractor.
A 1969 general liability was the key for unlocking coverage. For years, the city of Long Beach maintained the policy was lost. An insurance archeologist found it – the policy had gathered dust for decades in a room deep inside the Queen Mary.
Several religious institutions are looking for old liability policies to aid defense against allegations of physical or sexual abuse. Sometimes, parishioners or students make such claims as repressed memories surface 30 years after the abuse.
Insurance archeology was developed as a service to policyholders but insurers also realize the benefits of locating old policies. In states where long-tail claim costs are allocated to different carriers over several policy periods, locating policies issued by other carriers can lower the contribution of carriers already participating in the risk.
Many new areas of risk are emerging: Welding rod manufacturers are defending against product liability suits by welders exposed to the inhalation of manganese fumes. Depending on the success of suits now in U.S. District courts, these manufacturers may need to fund their defense by tapping into yesterday’s business assets.
Similarly, gasoline pump manufacturers and gasoline station chains may need to locate historic general liability policies. These “hot fuel suits” could present liability for failing to warn consumers concerning the negative effects of increased temperatures on fuel volume.
There also are new initiatives such as one in New Jersey seeking to recover the value of lost use of natural resources due to pollution. These “natural resource damages” or “NRD” claims have sparked many companies to take a second look at their historical CGL policies for coverage.
Attorneys may find that time is not on their clients’ side when it comes to finding lost insurance coverage. A phone call to an insurance archeologist may be a good start toward finding critical coverage and letting the attorney focus on the client’s legal needs while the insurance archeologist carries out the work of piecing together useful information buried in history.