Whether you keep old insurance policies tucked away in a filing cabinet or can’t quite remember where you last saw them, they may be more valuable than you realize. Believe it or not, old insurance policies can mean the difference between having a project financed or losing money.
While there are different types of business insurance, commercial general liability (CGL) insurance policies play a crucial role in protecting your business from lawsuits and other expenses when someone makes a claim for injuries or damages. Your current insurance policy and coverage protect you right now, of course, but so can past CGL insurance coverage — even if the policy was taken out decades ago or someone is suing you for damages that occurred before you owned the property.
But how and why is this the case? More importantly, what happens if you don’t have the insurance documents anymore, or the insurance companies are out of business?
Why Are Old CGL Policies Valuable?
No matter how old a CGL policy is, how long ago it was taken out, or even if the insurance carrier has been purchased and is part of another company now, it may still provide coverage in the event of a long-tail claim, meaning someone makes a claim against your business or your property for something that happened years or even decades ago. However, coverage often depends on whether the policy is an occurrence policy or a claims-made policy.
Occurrence policies cover incidents during the policy period, no matter when the claim is filed, while claims-made policies are dependent on when the claim is filed, not when the incident happened. For example, if the new owners of a gas station discover a leaking underground tank that was installed in the 1960s, there’s a good chance that an old (pre-1986) occurrence-based commercial general liability policy would cover the damages and clean-up, assuming the tank leaked during the policy period preceding 1986, and you wouldn’t have to pay for it out of your pocket.
The Policy Doesn’t Expire
Old CGL policies retain their value because there’s no statute of limitations on liability, meaning that the insurance company is required to provide coverage per the terms of the policy as long as the damage took place during the policy period.. You may not be covered by a present day policy, but because of how these older policies were originally written, the insurance coverage is still valid.
Older Policies Are Less Restrictive
As a rule, older insurance policies tend to have fewer restrictions and limitations, such as the pollution exclusion, making them far more valuable than you might realize. For example, CGL policies written before the 1970s likely don’t have any pollution exclusion. If the property was contaminated during the policy period, the insurance company could still be on the hook for covering the clean-up costs.
Over time, insurance carriers tightened the language in the insurance policies. By 1985, most commercial general liability policies included the absolute pollution exclusion language, making the terms less ambiguous, easier to enforce, and far less likely to cover environmental claims against your property.
That said, it’s still possible that older insurance policies were in effect, and these historic insurance policies could help cover the claim — if you can locate the insurance records.
Pay for Clean Up Costs and More
Once you’ve located and triggered historic insurance coverage, you can use it to pay for remediation and clean-up efforts. However, depending upon the laws in your state, you can also use these policies to cover:
- Legal defense and fees
- Searching for the responsible party
- Investigating the site
- Interim remedial measures
Beyond Soil and Groundwater Pollution Claims
Soil and groundwater contamination are the common claims made against commercial general liability insurance policies, but they’re not the only type of claim you can use historic insurance coverage for.
Asbestos Liability
Throughout the early 20th century, asbestos was a common and popular insulation in homes and buildings. As the link between asbestos and cancer became more well-known, the material was partly banned in the U.S. in 1989. However, many people were exposed to asbestos regularly, and it’s estimated that asbestos-related deaths will continue until at least 2049.
Because it can take anywhere from 10 to 40 or more years for symptoms to develop, it’s entirely possible that sometime in the future someone makes a claim against your business and/or property for their health problems, even though the exposure happened decades ago. Even if you’ve since removed all the asbestos, the injured party may still have a claim.
Chromated Copper Arsenate Liability
Chromated copper arsenate (CCA) is a preservative used to protect wood products from microbes and insects. As the name implies, CCA contains chromium, copper, and arsenic, and these substances can harm humans.
Some people have reported negative reactions to handling wood treated with CCA, such as itching, breathing problems, and some neurological symptoms. Because many CCA-treated wood products are used outdoors, the arsenic is of particular concern because it can leach into soil and contaminate drinking or groundwater supplies.
Construction Defect Liability
Buildings or other construction projects may fail due to faulty design, poor workmanship, subpar building materials, or geological failures. However, it may take decades before these flaws are uncovered or worse, cause a catastrophic building failure.
How Insurance Archaeology Helps
While some people keep every insurance policy they’ve ever had, some people prefer to purge their documents as soon as they can. What’s more, when you buy or inherit a property, you may not think to ask for copies of the previous owner’s insurance policies, assuming they even have them. But if someone makes a claim against your business and you’re hoping old CGL policies will help cover the claim, what can you do?
That’s where an insurance archaeologist comes in. These specialists are skilled at tracking down business records, old insurance policies, and other proof to help you find the insurance that will cover long-tail claims you never expected. And you might be surprised that these old policies can help you cover bodily injury claims, property damage claims, personal injury claims, and more.
Restorical Research’s team of insurance archaeologists can help you track down old CGL policies and identify potential coverage in the event of environmental contamination on your property. Contact us today for a free case review and learn how we can help.
