If you've been hit with an unexpected disaster at your company, your first step toward insurance recovery should be to identify and compile all potentially applicable insurance policies. This includes not only your own policies, but also the policies of others that may provide coverage for you, for example as an “additional insured.”
This will in turn depend on what type of claim you have. Broadly speaking, there are two types of insurance claims: first party and third party.
A “first party” claim is for a loss that you suffer. For example, your car is wrecked, or a storm damages your business premises, or an employee embezzles from you.
A “third party” claim is when someone else (the “third party”) suffers an injury or loss, but you or your company are responsible for it. For example, your company makes a product that causes damage to others, or someone slips and falls on your premises. The best example of a third party policy is the Commercial General Liability (“CGL”) policy, which is the subject of other blog posts here. Businesses usually buy both first party and third party coverage.
Common “first party” insurance policies include:
- Business Property
- Fidelity and Crime
Common “third party” insurance policies include:
- Commercial General Liability (“CGL”)
- Directors and Officers (“D&O”)
- Errors and Omissions (“E&O”)/Professional Malpractice
- Employment Practices Liability (“EPLI”)
- Some policies include first party and third party coverages (for example, Cyber and Privacy)
If you do not have an internal risk management department that keeps track of these policies, your coverage counsel and your insurance agent and/or broker may be helpful in locating and identifying potentially applicable policies.
If you are in-house counsel, you should make sure that your company’s document retention policy requires that all insurance policies, however old, be retained. Even policies purchased many years ago may potentially provide coverage—for example, CGL policies purchased earlier, where bodily injury or property damage does not become apparent until a later time. We have seen cases where policies sold decades earlier provided coverage for current claims.