Last week, two of my partners and I gave a presentation to the Japan-American Society of Georgia on Finding Buried Treasure in your Insurance Resources, a subject covered previously on this blog. The presentation included discussions of the difference between "occurrence" and "claims made" policies, and why decades old occurrence policies may still potentially provide coverage for "long tail" environmental and asbestos claims. We also discussed the potential value of the defense obligation under many liability policies, an obligation that may save insureds hundreds of thousands of dollars or more. The presentation also covered how modern commercial general liability (CGL) policies are not so general any more, due to the ever increasing number of exclusions added by carriers. Therefore, particularly in this age of "a la carte" coverage, it is more important than ever to have an experienced insurance agent who takes the time to understand your business and its risks and to procure the necessary coverage. We also discussed common sense steps policyholders can take to maximize their insurance resources.
The presentation included a very lively discussion, which, unfortunately, cannot be reproduced here. However, you can access the slides here.
Many companies are sitting on buried treasure and are not even aware of it. Where is the buried treasure? It's in their insurance policies. Many older insurance policies may provide coverage for liabilities resulting from long-tail exposures, such as environmental claims and asbestos claims. Older policies may lack exclusions, such as the "absolute" pollution exclusion, that are prevalent in more recent policies. These older policies can sometimes provide literally millions of dollars to pay defense costs and to respond to claims for bodily injury or property damage.
Buried treasure may also be found in claims files. A company may have put a carrier on notice of a claim which the carrier denied. Several years later, the company may have come out of pocket hundreds of thousands or even millions of dollars to defend and settle the claim. The carrier may have erroneously denied the claim, or it may have taken an aggressive position not clearly supported by the law. Sometimes, the law may have changed in a way that no longer supports the denial. In such instances, it may be possible to recover some or all of the defense and settlement costs.
For more information on finding buried treasure in your insurance policies, check out this article that I wrote with my law partner, Jim Leonard, that appeared in the Corporate Counselor. If your company has long tail liabilities or regularly faces claims, it is worth the time to consult with coverage counsel. Even if you have a single significant claim that has been denied, you should consider having coverage counsel review the denial.
John L. Watkins
John Watkins is a Partner with Thompson Hine LLP in Atlanta, Georgia, who represents business policyholders in claims and disputes with their insurance companies.