This article is the first in a series of six
that outlines how a party can reconstruct missing insurance policies that have
not been located through traditional methods of insurance archaeology. Lost
policies may be reconstructed using secondary, or circumstantial, evidence in
a court of law, allowing a policyholder without a policy in hand to prove coverage
to address a claim. This series is intended to provide a basic overview of the
reconstruction process and is not designed to provide a do-it-yourself manual
for reconstruction of lost policies. Future articles in this series will explore
the basic concepts explained herein in greater detail.
L. Talley, J.D. and Andrew F. Whitman
For several decades now, insurance archaeology—the discipline of researching
and locating missing insurance policies—has provided proof of coverage to address
legacy, or long-tail, liability claims. However, this discipline alone cannot
always provide sufficient documentation of coverage without additional methods
of policy reconstruction. These methods are most often accomplished through
an expert with a strong insurance and legal background.
When claims arise that implicate past insurance policies, a party may be
unable to find those policies. Much has been written about the methods a party
may employ to find old policies, yet, despite extensive research with even the
best methods, some policies may never be located. Although a party may be unable
to locate a complete policy through diligent research, nevertheless the party
may find various components of the policy, or information about its critical
and necessary elements. While this may not seem beneficial initially, such partial
evidence of a policy may still be useful in proving up coverage, because other
necessary components of the policy can be reconstructed through methods introduced
by a policy reconstruction expert or other experienced insurance professional.
Thus, with relevant policy evidence in hand, a party can confidently continue
the policy reconstruction process with the additional help of experts, typically
an insurance coverage lawyer and a policy reconstruction expert. To know how
best to proceed, some understanding of certain legal concepts is required. An
examination of these concepts can be grouped into three categories: an explanation
of the rules of evidence, a discussion of common law cases that have ruled on
policy reconstruction issues, and an introduction to concepts related to burden
of proof. Each of these concepts will be considered in turn.
Insurance policy reconstruction in a court of law begins with each court's
own rules of evidence. In 1965 the U.S. Supreme Court commissioned an advisory
committee to draft a set of evidence rules for use in the federal courts. (Federal
Rules of Evidence: 2009–2010 Edition, West, 2008, page iii). The resulting Federal
Rules of Evidence (FRE) were approved by Congress in 1975. While each state
is free to enact its own set of rules, most use the FRE as their template and
some have even adopted the FRE in whole without change. Nevertheless, each legal
jurisdiction will have its own set of evidentiary rules, and legal advice is
required to understand how such rules will apply to a specific reconstruction
matter. For the sake of simplicity, and since the FRE provide a common ground
for the federal courts in each state, this discussion will address this particular
set of rules.
It is axiomatic that the party seeking insurance coverage for a claim must
establish that a relevant policy was purchased. Obviously, an insurance policy
is a written contract and under the FRE for a party "to prove the content of
a writing … the original writing … is required, except as otherwise provided
by these rules" (FRE 1002). Unfortunately, producing the original, especially
in the case of insurance policies, is not always an option. When the original
is not available, the Federal Rules of Evidence allow for secondary evidence
to be used to establish the existence of the original document under the following
The first element of this rule is typically established by a company employee
who can testify that the original policy was destroyed or has not been discovered
and is therefore presumed lost. The second element is intended to bar policyholders
from destroying documents that would suppress damaging information. The final
element of the rule requires that the policyholder will have mounted a diligent
effort to retrieve the policy and is usually satisfied when an experienced insurance
archaeologist has been retained to search for the missing policy.
When documents are presented as secondary evidence of a missing policy, such
documents must also satisfy authentication standards and fall within exceptions
to the rule against hearsay. The authentication of documents is governed by
FRE 901, which requires that a document must be authentic to be admissible,
i.e., that it is what it purports to be. Authentication can occur in a number
of ways, including the testimony of a person with knowledge about the document
or evidence that it has been in existence for 20 years or more and meets certain
other conditions. (See FRE 901(b)(1) and FRE 901(b)(8).)
Hearsay is essentially a statement made outside of a courtroom, which is
inadmissible because it is not made under oath. Several exceptions to the rule
against hearsay exist under the FRE. When such hearsay statements appear on
a document, for example a premium invoice identifying the policy number and
period of an old insurance policy, such invoice (and the hearsay statement it
includes) can be admissible under the business record exception to the hearsay
rule if it were kept in the course of regularly conducted business and meets
several other conditions. (See FRE 803(6).) Additionally, statements in a document
in existence 20 years or more and properly authenticated under FRE 901 can be
admissible as an exception to the hearsay rule. (See FRE 803(16).)
Assuming threshold requirements under a court's rules of evidence are met,
a policyholder then has the burden to prove both the policy's existence and
its critical contents. Emons Indus. Inc. v. Liberty
Mut. Fire Ins. Co., 545 F. Supp. 185 (S.D.N.Y. 1982). The existence and
contents of the policy can be shown through a variety of documents and corroborating
testimony. A few examples include the following:
A policyholder need not establish every word of a lost insurance policy.
The policy may be proven by secondary evidence without having to reconstruct
the language of the policy verbatim. Dart Indus. Inc.
v. Commercial Union Ins. Co., 28 Cal. 4th 1059, 52 P.3d 79 (Cal. 2002).
This means that once the existence and contents of the policy have been shown,
"the proponent of the lost document need only prove the relevant substance of
This "relevant substance of the document" can often be established by standard
insurance policy forms. Most insurers used common policy forms drafted by industry
associations that were approved by state regulators. Policy reconstruction experts
can testify that an insurer used such policy forms with a presentation of the
language in use at the relevant time period.
In presenting evidence of a missing insurance policy, a party must satisfy
the court's "burden of proof." Essentially, this burden is the amount of evidence
required by the court to establish proof. This burden is not established by
federal or state rules of evidence, but rather by the precedent of case decisions
previously reached in the jurisdiction. Thus, various state and federal courts
may have differing burdens of proof that a party must satisfy to prove a missing
While many courts have announced the burden required to prove a missing insurance
policy, a number of jurisdictions in the United States have not decided the
issue. Of those courts which have decided the issue, the majority rule appears
to be that the burden of proof required to establish the issuance and terms
of a lost policy is a "preponderance of the evidence."
See for example,
Remington Arms Co. v. Liberty Mut. Ins. Co., 810 F. Supp. 1420, 1423–1424
(D. Del. 1992). This means that the policyholder must demonstrate that it was
more likely than not that the policy existed and embodied the language presented
by the evidence.
Some courts have established a more exacting burden of proof that requires
a policyholder prove the missing policy by "clear and convincing evidence."
See Boyce Thompson
Inst. for Plant Research, Inc. v. Ins. Co. of N. Am., 751 F. Supp. 1137
(S.D.N.Y. 1990). This means that the policyholder must establish that it was
substantially more likely than not that the policy existed and embodied the
language presented by the evidence. Thus, the evidence must not only be "clear,"
but also "compelling," suggesting something more than the quantum of evidence
required by a "preponderance." Only a handful of jurisdictions have adopted
this burden of proof. Again, the assistance of legal counsel is required to
know what burden of proof may be required for a particular matter and how that
burden might best be met through available secondary evidence and the assistance
Note: See the second article in this
Probative Value of Secondary Evidence.
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