By G. David Godwin, Partner, Carroll, Burdick & McDonough LLP
In his article, “Lost a Duty to Defend? The Duty to Defend under a Missing Liability Policy,” appearing in the January/February 2011 issue of Coverage, G. David Godwin of Carroll, Burdick & McDonough LLP, explores the rights and obligations of policyholders and insurers in connection with claims for a defense under missing liability policies.
Policyholders seeking a defense under a missing or lost liability insurance policy must establish the existence and terms of the policy as well as making a prima facia case of a potential for coverage. The article discusses what the insured must prove and how the parties may determine when a duty to defend is owed under a missing policy. The determination of whether a duty to defend exists begins with an analysis of whether a policy exists and what its terms are, based on the facts that can be established, secondary evidence that can be adduced and the applicable law specific to the alleged contract. The article discusses respective burdens of proof and the interplay of the factors that may be considered in determining whether an insurer should defend under an alleged missing policy. The article states there are at least six key terms that must be established by the insured in most lost policy cases:
• The identity of the insured and insurer;
• The policy number;
• The policy period;
• The limits afforded under the policy;
• That the type of claim at issue was one of the hazards covered by the policy; and
• The amount and payment of premium.
The article further notes that other terms may also have to be established depending on the claim and circumstances at issue and presents an illustrative example. The article describes what is involved and the challenges presented as well as provides helpful tips as to establishing the critical elements of a missing policy. The Best Evidence Rule and Secondary Evidence Rule are addressed. The article discusses what constitutes secondary evidence and discusses applicable rules of evidence, observing that the insured may have to provide clear and convincing evidence of the missing policy and its terms. Moreover, finding relevant documents may not be enough as the insured should adduce enough proof to authenticate and admit the secondary evidence in a court of law. Conversely, the insurer has the burden of proof as to exclusions in the policy which it may meet by resort to its internal underwriting practices, its records and personnel as well as industry practices. The article concludes that while there is no duty to defend under a missing policy unless its existence and key terms are established, when that occurs the insured may be owed the same duties as would pertain to known policies.
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