Insurance Archaeology

Refers to a process of reviewing all insurance policies ever held by a corporation to determine whether claims can be made against them for present liabilities based on their genesis (origin) in activities that took place when the policies were in force. Insurance archaeology focuses on policies that cover liabilities arising during the term of the policy (i.e., “occurrence policies”) rather than “claims made”.

Because under U.S. law, liability for an array of claims, for example environmental liability or product liability (especially asbestos), may arise years and even decades after the events or activities that created them the product of such archaeology can be very valuable. In particular, under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, known as the “Superfund”), a broad range of parties can be held jointly and severally liable for environmental cleanup costs, often for pollution that occurred decades before.

U.S. courts have repeatedly held that companies can claim under the policies that were in force when the events or acts occurred, even where those acts were not prohibited or actionable during that time-frame. Moreover, U.S. courts have also generally held that a corporation that is liable for a predecessor’s products or pollution can claim under a predecessor’s applicable insurance policies. Further they have also held that an acquired corporation can expressly assign its insurance coverage to its purchaser, even without the insurer’s consent after a loss has occurred and notwithstanding “no assignment” clauses. The result has been disastrous for many insurers, most notably syndicates in Lloyds.

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