The Lost or Missing Insurance Policy
| Publication year | 1993 |
| Pages | 1277 |
1993, June, Pg. 1277. The Lost or Missing Insurance Policy
In many liability insurance coverage disputes, such as those involving toxic torts, environmental pollution and latent injury, the insured seeks coverage under a policy which was issued ten, twenty or more years ago. These policies frequently have been lost or destroyed in the ordinary course of document retention/destruction programs.
When neither the insurer nor the insured has the original or a copy of a liability policy allegedly issued in years past, the questions that must be answered are (1) who has the burden of proving the existence and contents of the lost or missing policy and (2) what secondary evidence is admissible and sufficient to prove the existence and terms of coverage at trial. This article addresses these issues.
In Colorado, a party seeking to enforce its rights under a lost instrument bears the burden of proving both the existence and contents of the missing instrument.(fn1) Although no Colorado court has squarely addressed the issue, the general rule is that the insured has the burden of proving the existence of a lost or missing policy and the existence of coverage under that policy for a particular risk.(fn2) The Colorado Supreme Court has required that proof of the contents of a missing instrument be "clear and convincing." However, the current burden may simply be proof by a preponderance of the evidence.(fn3)
Some courts have characterized this burden on the insured as the burden of proving the "material terms" of the policy. The material terms likely include the policy limits, the duration of the policy, the types of coverages afforded and the premiums paid.(fn4)
At least one court has held that the insurer bears the burden of proving the terms of any exceptions from coverage.(fn5) In this author's opinion, the reasoning of this court is suspect given its reliance on a line of authority that simply holds, consistent with Colorado law, that an insurer bears the burden of proving the application of an exclusion or limiting condition to a claim.(fn6) This authority does not address the case of the lost or missing policy. The better reasoned rule appears to be that the insured bears the same burden as any other party seeking to prove the existence and contents of a missing instrument and that the insured must prove all of the material terms and conditions of the policy, including policy exclusions and limiting conditions.
It is well established that the insured may prove the fact of liability insurance through means other than the policy itself.(fn7) The existence of a policy may be proven by the oral testimony of witnesses with first-hand knowledge, as well as by documentary evidence, such as ledger references to the policy number.(fn8) On the other hand, the material terms of a lost policy cannot be established by mere proof of the existence of the policy.(fn9) Additionally, in proving the terms, it is not enough to produce a "specimen" copy of a policy (such as an unexecuted standard form), at least where several such standard forms exist.(fn10)
The Federal and Colorado Rules of Evidence provide for varying methods of proof with regard to the contents of documents. The Rules first express a preference for an original writing in order to prove the contents of that writing.(fn11) Rule 1003 allows the admission of a duplicate to the same extent as an original unless a genuine question as to the authenticity of the original is raised, or unless it would be unfair under the circumstances.
Rule 1004 states that the original is not required and that secondary evidence of the contents of the document is admissible if the original has been lost or destroyed, is not obtainable, is in the possession of the opponent who will not produce it or concerns only collateral matters.(fn12) There is no hierarchy of preference of secondary evidence, but all secondary evidence must be authenticated.(fn13)
The party seeking to introduce secondary evidence of a lost document must further demonstrate that it was not lost or destroyed in bad faith and that a diligent search has been made for the writing.(fn14) The question of whether the requisite "diligence" has been exercised by the party searching for the document is a preliminary question left to the court's discretion.(fn15)
It may be difficult for the insured to meet its burden of proving that the policy was not destroyed in bad faith when there is no evidence of the circumstances of the loss. In addition, it may be difficult to show that the policy was lost or destroyed when in many instances the insured simply cannot locate the policy.(fn16) If the insured has "archiving" procedures in place, explaining that the loss of the policy occurred without bad faith becomes
Usually, an insured is entitled to a jury trial on the factual questions of the existence and contents of the policy.(fn18) The court, however, must resolve the threshold issue of whether there is enough evidence to submit the issue to a jury and may dispose of a claim...
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