In recent years, there has been a wave of states reforming their statutes of limitations for civil actions based upon child sexual abuse. For instance, New York passed the Child Victims Act (CVA) in 2018, which, in addition to lengthening considerably the statute of limitations to begin a civil action based upon child sex abuse, provided an avenue allowing victims of child sexual assault and/or abuse to bring civil claims even after the applicable statute of limitations had already passed. New York’s “look-back period” or “window” allowed victims to bring formerly time-barred claims against both individuals and institutions for bodily injury arising from sexual abuse. In fact, 25 other states and three territories have instituted similar revival windows, 17 states have passed more expansive civil statutes of limitations laws, and 38 states introduced a statute of limitations reform bill in 2023.
These windows have allowed thousands of sexual abuse victims to pursue claims against the institutions that their abusers were employed by, volunteered with, or were associated with. Among the most famous of these institutions is the Boy Scouts of America, with over 82,000 claims asserted against it nationwide, in addition to scores of Catholic dioceses. Indeed, many of these institutions have resorted to bankruptcy to discharge the massive liability anticipated because sexual abuse victims were able to bring previously time-barred suits against them.
These institutions then make claims for a defense in these suits and indemnity for the resulting damages to their insurers at the time of the alleged abuse. The challenge then becomes how a policyholder or assignee of a policyholder’s insurance rights can advance a claim, or how an insurance company can evaluate a claim, when complete copies of the operative policies are nowhere to be found. This article addresses the legal and evidentiary standards that apply to these “lost policy” issues.
An analysis of the coverage issues at play in revived child sex abuse cases necessarily begins with a discussion of the burdens borne by each of the parties involved. Courts around the country uniformly maintain that the proponent of the policy bears the burden of proving: (1) the existence of the policy, and (2) the material terms of the policy. Most jurisdictions rule that these elements must be proven by a preponderance of the evidence, though some apply a higher standard, such as clear and convincing evidence. Once the proponent of the policy meets this initial burden, the burden shifts to the insurer to prove that the policy contained limitations, exemptions, or exclusions that would bar coverage. If the insurer does not meet this burden, then the reconstructed policy and its material terms govern the underlying dispute.
The analysis begins by considering the policyholder’s burden of proving that, at the time the alleged conduct occurred, they were insured under an active policy of insurance. This may sound simple at first blush, but in the instance of child sex abuse cases brought during a look-back period, often the relevant policy was issued decades ago. As such, it is challenging, if not impossible, for the policyholder to produce an original copy of the policy. If discovery shows that the insurer is likewise unable to produce a complete copy of the policy, the parties may resort to secondary evidence to prove the existence and material terms of the lost or incomplete policy.
Federal Rule of Evidence (FRE) 1002 requires an “original writing” in order to prove the contents thereof; the party attempting to prove the existence and material terms may introduce secondary evidence (i.e., evidence other than a copy of the exact document) upon showing that: (1) the original is lost and/or destroyed, (2) the proponent of the document did not act in bad faith in losing and/or destroying the document, and (3) a diligent search for the original document has proven unsuccessful. Indeed, the advisory committee comments on FRE 1004 advise that a proponent of a lost insurance policy wishing to introduce secondary evidence must offer a “satisfactory explanation” as to why they are unable to produce the original. Satisfactory explanations may include, for example, that the policy was lost or destroyed or that the original is in the possession of a third party and there exists no means to procure a copy. Ultimately, searches for policies should be “diligent but unsuccessful” and “encompass[] areas in which the policies most likely would have been found if they still existed.”
Once the proponent of the policy establishes its right to use secondary evidence to prove the policy’s existence, the proponent may put forth acceptable forms of secondary evidence, including but not limited to: (1) insuring documents, such as a declarations page or portions of the policy; (2) business records, underwriters’ folios, billings to the insured, evidence of certain types of coverage, evidence of certain policy periods, and coverage limits; (3) policyholder documents, such as board of directors’ meeting minutes, correspondence, or other descriptions of coverage; (4) witness testimony, such as that from an employee of the insurer; (5) ledger cards interpreted by the insurance agent of the proponent of the policy; or (6) evidence of the payment of policy premiums to the insurer.
Importantly, although primary evidence is preferred (i.e., the original or a copy of the insurance policy), there exists no formal hierarchy of preferred evidence once entitlement to introduce secondary evidence to prove the existence of an insurance policy is established by the proponent of the policy. Indeed, in response to FRE 1004, the advisory committee commented:
The rule recognizes no “degrees” of secondary evidence. While strict logic might call for extending the principle of preference beyond simply preferring the original, the formulation of a hierarchy of preferences and a procedure for making it effective is believed to involve unwarranted complexities. Most, if not all, that would be accomplished by an extended scheme of preferences will, in any event, be achieved through the normal motivation of a party to present the most convincing evidence possible and the arguments and procedures available to his opponent if he does not.
However, although this comment applies no hierarchy de jure, a prudent attorney should, at a minimum, consider the existence of a de factohierarchy. For instance, a copy of the declarations page from the policy that was in effect at the time of the abuse, showing the amounts of coverage and the premiums paid, may be more reliable evidence than would be the testimony from someone who was employed by the insurance company at the time of the alleged incident.
The proponent of a lost policy needs to make certain that a diligent search has been performed in order to rely on secondary evidence. In practice, this means searching the internal records of both the insured and the insurer to determine if any documents related to coverage exist. Every insurance company maintains their own records retention policies, and in many cases paper records are not maintained for more than 10 years; however, an internal search such as this is the best place to start. In addition, insurers often maintain substantial electronic collections of older policies through third-party vendors and document repositories, and searches should emphasize materials that are in the insurer’s immediate possession as well as those maintained by third parties on the insurer’s behalf. Underwriting materials, claims files, and similar documents evidencing coverage may also be useful and relevant to proving the terms of coverage.
Finally, regarding the ultimate admissibility of secondary evidence obtained, practitioners should remember the “ancient documents rule” in FRE 901(b)(8). The requirement of authenticity can be satisfied if the proponent has evidence that the document: “(A) is in a condition that creates no suspicion about its authenticity; (B) was in a place where, if authentic, it would likely be; and (C) is at least 20 years old when offered.” This is a low bar for a proponent to meet: “Federal Rule of Evidence 901 ‘require[s] only enough evidence that a jury could have reasonably concluded that a document was authentic.’” This is nothing more than a prima facieshowing, and given the sheer volume of sexual abuse claims that allege abuse under policies issued more than 20 years ago, the ancient documents rule may be very helpful for the proponent of a policy.
Once the proponent of the policy meets the first prong—to prove the existence of the policy at the time the allegations in the underlying action allegedly took place—the proponent then must satisfy the second prong, which is to prove the material terms of the policy in question. The evidentiary approach here is much the same. A copy of the policy is highly preferable to secondary evidence, but secondary evidence is admissible to prove the material terms if the three prongs of FRE 1004 are satisfied. However, proving the material terms of a lost policy has an added twist—that of expert reports and testimony. Experts known as “insurance archaeologists” are routinely called upon to reconstruct the material terms of lost insurance policies. These experts comb through corporate records, interview former employees, and identify past litigation involving liability insurance policies to recreate the insured’s coverage. Insurance industry professionals and academics specializing in insurance issues are also routinely asked to testify on the material terms of the policy.
Should discovery into the insurer’s internal records search come up empty, the proponent should attempt to recreate the policy. Insurers often issue very similar policies to similar types of institutions. Should the insurer not be able to find the actual policy at issue, it may be able to locate a policy issued to a similar entity that was effective during the period of alleged abuse. While the found policy may not be an exact replica of the one issued to the insured, the main coverage forms likely provide insight into the material terms of the lost policy.
In situations where no such policy can be found, there are additional (and more creative) ways to recreate a policy. One example is to search records on appeal for cases in which the insurer and institution were involved during the period of alleged abuse. Often these records include a full copy of the policy at issue. Should no policy be found in any internal records or former litigation, the next best practice is to look to the standard forms.
Proving the material terms of an insurance policy is simplified when the policy is likely to have contained standard policy forms. Unless the insurer knows that it only issued manuscript policies, looking to standard Insurance Services Office (ISO) commercial general liability (CGL) forms will likely provide enough information for an insurer to determine whether a claim would come within the purported policies’ grant of coverage. For instance, if a proponent has evidence to suggest that the relevant policy used CGL forms covering bodily injury, the material terms were standardized and could be proven by reference to the appropriate CGL form. Expert testimony may be necessary to establish what forms would have been used in each lost policy, depending on when the policy was issued and what standard forms were in circulation during that time.
Ideally, discovery has produced a complete or near-complete copy of the policy that demonstrates its existence and its material terms, but counsel should be constantly evaluating how an expert interacts with your case. Insurance archaeologists may be useful to assess the search of the insured’s records and to address the sufficiency of the insured’s search for policy documents; however, the expert focus will likely be on policy reconstruction. For example, some useful topics that an expert may be able to address include the likelihood that certain standard forms were included, the contents of CGL standard forms used at different times, whether a CGL policy would have “accident” or “occurrence” based bodily injury limits, whether aggregate limits would apply to bodily injury claims in occurrence-based policies, and whether multiple-year policy terms would be annualized to provide coverage up to their full limits in each year.
Experts may also be useful in establishing the relevance of known policies in successive or prior years. If there is a gap in coverage, then reference to the insurance policies issued immediately before and after it can be instructive. Consider a situation where there is a missing umbrella policy alleged to have been issued in 1956, but discovery bears out complete umbrella policies in 1955 and 1957. Since the material terms of the policy issued in 1955 are known, they can be compared to the material terms of the policy issued in 1957; and if they are the same, then it is reasonable to conclude that the lost policy in 1956 likely did not deviate from the pattern.
One final consideration specific to lost umbrella and excess policies is whether there is any secondary evidence that the lost umbrella policy was “following form.” If the umbrella policy contained language in the declarations page or other secondary evidence suggests that it follows form, then the material terms of the umbrella policy can be proved by simply referring to the material terms of an underlying policy.
Even after the proponent of the policy meets its initial burden of proving both the existence and material terms of the policy, the opponent of the policy may rebut the same by either negating the sufficiency of the evidence offered by the proponent or arguing that the proponent did not meet its burden. However, insurers must consider the practical climate in which they operate. For example, the New York State Department of Financial Services (DFS) issued a circular letter to all authorized property/casualty insurers, licensed insurance producers, adjusters, and reinsurers encouraging these parties with relevant records to act in utmost good faith to preserve and provide any relevant records to policyholders and other entitled persons, whether in connection with any lawful discovery process or otherwise. This includes the “basic goal” of effecting “the prompt and fair settlement of all claims.” The DFS circular goes on to encourage insurers “not to cite the minimum requirements set forth in the Insurance Law and regulations as a basis for destroying potentially relevant records, when they know or have reason to know they have potential liability with respect to CVA-related claims.” While the burden to prove coverage is on the insured, in New York at least, insurers have a specific obligation to provide all relevant documents and proofs of coverage in cases involving CVA claims.
Ultimately, it will be the insurer’s burden to disprove coverage by reference to a coverage limitation or exclusion. It is not the policyholder’s or its assignee’s responsibility to prove that a missing policy did not contain, for instance, an endorsement with a molestation exclusion; it is the insurer’s burden to prove that it did. The same is true for any exhaustion of aggregate limits by prior claims, though aggregate limits likely do not apply to many CGL policies issued before 1985—once the proponent has met its initial burden, it is the insurer’s responsibility to disprove coverage.
CVA laws have provided solace to many and an avenue for victims of sexual abuse to finally achieve justice for their claims. They have also presented unique challenges for coverage counsel given the scope and frequency that lost policy issues arise. The above is meant to provide a basic overview of issues involving lost policies and the legal and evidentiary standards that govern recovery under lost policies. Succeeding on lost policy arguments requires a thorough grounding in the applicable legal standards, thoughtful discovery practices, and a detailed analysis of the coverage issues raised by the available evidence. By understanding these issues, policyholders and assignees will be better positioned to advance their claims for coverage, while insurance companies will be able to meet their goal of achieving “prompt and fair” resolutions of CVA claims.
