Especially your expired liability insurance policies.
Imagine the worst-case scenario: a customer sues you for injuries allegedly caused by one of your products. It’s not clear when it happened or over what period of time. Then make it worse: you can’t find the policy that might cover that claim.
Most liability policies today are written on a “claims-made” basis, meaning they cover claims reported during the policy term, as long as they result from incidents occurring after the policy’s retroactive date. When you first buy a claims-made policy, your retroactive date will likely be the same as the policy’s inception date. Ideally, when you renew or replace that policy, the insurer will use the same retroactive date. This gives you continuous coverage back to the retroactive date of your original policy.
Older liability policies are often written on an “occurrence” basis, which means they cover claims that arise from incidents that occur during the policy period, even if the claim is filed years later. These older policies often come into play in cases involving “long-tail” liability claims, such as environmental, product liability and other claims that can take years to develop.
When you make a claim that might be covered by an old insurance policy, it’s your responsibility to prove the policy existed. Having the actual document in hand can prevent coverage disputes with your insurer. For this reason, risk management experts strongly recommend keeping all insurance policies, even expired ones, in a safe place, and maintaining a list of policy information (including insurer name, address, type of policy, policy number and inception/expiration dates) in a separate location.
Even if you can’t locate an old policy, you might be able to document its existence. Your broker might have a copy (although brokerage firms have no legal obligation to keep copies of clients’ expired policies); your accounting department might have records of premium payments; your risk manager might have notes or correspondence relating to the policy or other claims paid under it.
If your organization has long-tail liability exposures, including pollution liability or products liability exposures, you have special risk management needs.
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