How long should one keep insurance documents? Seven years? Maybe 10? A recent appellate court case that relied on proof of insurance between 1961 and 1965 to get a trucking company off the hook for $9 million suggests to never get rid of any documentation, even from 50 years ago.
The case goes back to 1999, when the United States filed a lawsuit against Monsanto and Solutia seeking costs taken on by the Environmental Protection Agency for removing hazardous substances from Dead Creek in Sauget and Cahokia, Ill. According to the original lawsuit, Monsanto owned plants in the area from 1900 to 1997 and disposed of hazardous waste that found its way to the creek.
Monsanto and Solutia turned around and filed a third-party complaint against Rogers Cartage Co., which operated two trucking depots, one near Sauget and other near Cahokia. The two companies claimed that Rogers Cartage washed trucks at the depots after hauling hazardous waste, thereby making them liable for the contamination. Soon after, the U.S. government added Rogers Cartage to the original complaint, compelling other defendants to also file a cross-claim against the trucking company.
After a lengthy legal battle with some twists and turns, several defendants in the original EPA lawsuit settled their claims against Rogers Cartage in 2011 for the sum of $7.5 million. Rogers Cartage had to pay only $50,000 out of pocket, under the assumption that the trucking company would recover the rest from Travelers Indemnity Co., its insurance company.
This is when Rogers Cartage experienced another legal battle. This time, against the insurance company.
After settling two lawsuits for a total of $9 million, Rogers sought indemnification from Travelers under several comprehensive general liability (CGL) and auto policies. Travelers argued that they were absolved from responsibility since Rogers could not provide proof of coverage from 1961 through 1965.
Several facts were undisputed between the two parties:
- Neither party could locate originals or copies of the disputed liability policies;
- No witnesses available with knowledge of the existence, terms or conditions of disputed liability policies;
- Proof of CGL policies for the periods of 1960-1961 and 1965-1966; and
- Travelers continued to issue CGL policies to Rogers through 1986.
In a circuit court, Rogers offered secondary evidence, including a letter from a Travelers claims adjuster dated Aug. 30, 2000. The letter notified Rogers that Travelers would be paying for the trucking company’s defense costs in the EPA lawsuits, stating the following:
“As you know, Travelers is participating in Rogers Cartage’s defense under confirmed policies in effect from May 1, 1961, to May 1, 1962, and from April 1, 1967, to April 1, 1986. However, Travelers has also located secondary evidence that Travelers may have also issued policies which were in effect from May 1, 1961, to April 1, 1967.”
In the end, it was the proof of policies immediately before and immediately after (bookend policies) the missing policy periods that got Rogers off the hook for $9 million. Rogers compared the bookend policies to “specimen policies” provided by Travelers and found no difference between the two in matters relevant to the original EPA lawsuit coverage.
Travelers argued that even if there was proof of the mere existence of a policy in the disputed periods, bookend policies were not necessarily indicative of what coverage Rogers was provided in between. The insurance company went on to say that “specimen policies” are essentially building blocks used to construct specific policies.
Despite discrepancies between the bookend policies and specimen policies, any policies that were relevant to the lawsuit coverage were virtually the same. Therefore, the court ruled that any CGL policy issued to Rogers during the disputed period was likely to include coverage in question.
On Dec. 29, an Illinois appellate court affirmed the circuit court’s decision granting Rogers summary judgement.
“Rogers proved by a preponderance of the evidence the existence of CGL policies issued by Travelers to Rogers for the policy periods of 1961-62, 1962-63, and 1963-64,” Justice Daniel Pierce opined. “Rogers further presented sufficient evidence to show that the material terms and conditions of the CGL policies issued by Travelers between 1961 through 1965 CGL policy were more probably than not the same terms and conditions set forth in the 1961 and 1965 CGL policies.”
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