Finding Old Insurance Policies to Cover Sex Abuse Liability

Policyholder Advisor & Alert

PUBLISHED ON: March 22, 2024

Key Points

  • Sexual abuse claims often trigger decades-old insurance policies.
  • Insurance archeologists and insurance lawyers can locate old policies that provide valuable coverage.
  • An insurance company’s contention that it does not have copies of an old policy should not be accepted at face value.

Institutions that care for children are facing a tidal wave of claims brought by their former charges alleging sexual abuse.  These are claims for bodily injury that are prima facie covered by general liability insurance.  However, claims of sexual abuse often date back 30, 40 or more years, and few institutions know what their insurance coverage was back then.  When institutions are faced with sex abuse claims and cannot locate their historic insurance coverage, they must rely on an insurance archaeologist.

An insurance archaeologist is expert in how to find historic insurance policies – or secondary evidence of their existence, which generally suffices to establish coverage. Old minute books, accounting files, budget work papers, old litigation files, correspondence with old brokers -- all can contain evidence of old insurance policies. Insurance archaeologists can succeed in finding policies back to the 1950’s.  They are essential to accessing coverage for long-tail claims.

Moreover, insurance archaeologists know what questions to ask insurance companies, what files to look in, and how to search those files.  For example, most insurance company files are organized by the name of the insured. It is necessary to search under all names that a company may be known by. A search for IBM may not pick up I.B.M. or International Business Machines.

Insurance archaeologists can find coverage based on the scantiest of evidence.  For example, in one case a long-forgotten letter identified a policy number.  That policy number was recognized as used by a certain London broker.  Following up with the London broker unlocked millions of dollars of coverage.

In another case, in an old litigation file, the archaeologist found a letter to the policyholder from the attorney appointed by the insurance company to defend it that contained the name of the insurance company.  That insurance company ultimately acknowledged coverage.

Many older policies did not contain aggregate limits, especially for bodily injury.

 

Insurance archaeologists do have their limitations.  They can simply be ignored; they do not have subpoena power or the force of law.  Many insurance companies and brokers will respond to an archaeologist – but some won’t.  Worse, they may obfuscate or even misrepresent facts.  In our experience representing policyholders pursuing long-tail claims, on three separate occasions insurance companies have told us they did not have evidence of policies, only to produce them after litigation commenced and certified responses to discovery were due. Persistence is necessary when pursuing insurance coverage. There are times when an insurance archaeologist must work with an insurance coverage lawyer.
 
A coverage lawyer can procure the closest thing to finality on this issue – a certified statement by an insurance company that it has done a complete search of its files and has not found any evidence that it sold a policy to that company.  It is important to note that insurance companies often respond that they do not have copies of an insurance policy.  This begs the question, and the policyholder should reject such a response.  Insurance coverage can be proven by secondary evidence, and very little secondary evidence at that. We have gained coverage literally on the basis of a single piece of paper identifying an insurance company.

Some insurance companies will assert in response to a request for policy information that while they may have issued a policy to the insured, they cannot locate its terms and conditions.  The policyholder should also reject such a response.  Insurance policies use standardized terms.  If an insurance company can identify that it issued a policy, it can identify its key terms and conditions. If necessary, policyholders should retain an expert to explain the standardized terms that the policy would have used.

An experienced coverage lawyer can also review the policy in force in the period in question and analyze it.  For example, many older policies did not contain aggregate limits, especially for bodily injury.  This means that instead of having a total of, say, $1,000,000 for the entire policy, the policyholder has $1,000,000 for each separate claim.  Insurance companies often contend, wrongly, that their policies contain aggregate limits even if they do not.

Finally, when sued, a policyholder’s first concern is who will defend it.  The duty to defend is broader than the duty to indemnify.  A policyholder may not have enough evidence to ultimately prove coverage.  However, it may have enough evidence to establish a duty to defend.  Standard general liability policies practically always require the insurance company to defend.

Sex abuse cases can have a multi-million-dollar exposure.  It is reported that one school district recently paid $6,000,000 to settle two claims.  A company should make every effort to have its insurance company defend and indemnify it against these claims.

 

About Anderson Kill
Anderson Kill practices law in the areas of Insurance Recovery, Commercial Litigation, Environmental Law, Estates, Trusts and Tax Services, Corporate and Securities, Antitrust, Banking and Lending, Bankruptcy and Restructuring, Real Estate and Construction, Foreign Investment Recovery, Public Law, Government Affairs, Employment and Labor Law, Captive Insurance, Intellectual Property, Corporate Tax, Hospitality, and Health Reform. Recognized nationwide by Chambers USA, and best-known for its work in insurance recovery, the firm represents policyholders only in insurance coverage disputes — with no ties to insurance companies and has no conflicts of interest. Clients include Fortune 1000 companies, small and medium-sized businesses, governmental entities, and nonprofits as well as personal estates. The firm has offices in New York, NY, Boston, MA, Denver, CO, Los Angeles, CA, Newark, NJ, Philadelphia, PA, Stamford, CT, and Washington, D.C.

Related People

Insurance Recovery Attorney | Anderson Kill P.C.
Robert D. Chesler
Shareholder
Newark
Insurance Recovery Attorney | Anderson Kill P.C.
John P. Lacey Jr.
Attorney
DC Client Team Member - Admitted in NJ only
PA Client Team Member - Admitted in NJ only

Newark | Philadelphia | Washington, DC

Related Practice Areas

Related Publications