Why
You Should Keep Those Old Policies !
It's unlikely that old, expired
insurance policies will ever have any use, but they might just come
in handy. This is particularly true with Liability policies, since
claims sometimes arise years after they expire.
Noise induced hearing loss claims are becoming a major source
of liability claims. Such claims are covered by Workers Compensation,
of course, but a new trend is to sue the manufacturer of the equipment
for causing the hearing loss. Philadelphia firefighters recently
brought a brought suit against the manufacturer of the sirens installed
in their fire engines. They charged that the sirens produced excessive
noise, which caused hearing loss; in other words, the siren was
a defective product. (Other noisy products that affect workers'
lives include jackhammers, woodchoppers, saws, riveters, and so
on.)
When the damage is done
over a period of years, is it covered by old Liability policies-
or just the current one? The Comprehensive General Liability policy,
which was renamed the Commercial General Liability (CGL) policy
in 1986, is the common Liability policy for businesses. Its history
is decades old, and it is the policy that responds to these claims.
Specifically, the CGL's
"Products - Complete Work" section addresses this situation.
(This coverage is seldom excluded from a policy.) Insurance company
records often do not go as far back as the start of a hearing injury,
and without proof of coverage, business would be unable to prove
what coverage existed at a given time. Think of the Philadelphia
firefighters: Their hearing loss may have commenced 20 or 25 years
ago. Since old Liability policies are likely to be the occurrence
type, they would cover injuries that developed while they were still
in effect.
If the injury develops
over a period of years, its possible that a number of policies could
cover it. The more policies, the more policy dollars available to
compensate the injured. Insureds who keep their policies increase
their chances that claims will be covered by past policies. In mass
tort cases, such as the Philadelphia suit, more dollars can be crucial
to the insured (here, the siren manufacturer).
Aggregate limits are provisions
that specify the maximum amount the policy will pay out in liability
over one year. The limit might be $100,000 per occurrence to a maximum
of $500,000 per year. Most of the time, aggregate limits do not
affect the insured; however, a high aggregate liability figure is
a comfort to Insureds who may suffer more than one loss in one year-
or who face mass tort situations.
Optical scanning and other
new storage methods are reducing the potential for lost documentation,
but hanging on to expired Liability policies is still sound.
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