Coverage Quiz (Q4 2023)


By Al Haverkamp of Lucas & Haverkamp

1Question: In the 1950s and 60s Dart Industries manufactured and marketed a drug called DES. DES was a drug which was supposed to prevent miscarriages, but it ended up causing many women to become infertile. Needless to say, Dart faced extensive litigation concerning its DES drug, including numerous lawsuits in California. Dart sought coverage - both a defense and indemnity - from its insurer in the 1950s, Commercial Union, but Dart never could find the Commercial Union policy (nor could Commercial Union). The only evidence Dart had of the policy contents was the testimony of a licensed broker who testified he had seen the policy, and that it was an CGL occurrence-based policy with a $300,000 limit. Commercial Union denied coverage asserting that without the actual policy language, coverage could not be proved. Is there coverage?
Answer: Yes. Because Dart conducted a good faith search for the policy but could not locate it, Dart could prove coverage by secondary evidence. Such secondary evidence needed to show the existence and terms of the coverage “material” to the risk at issue. Dart did not have to prove the policy contents verbatim. The testimony of the broker was sufficient to do so and established the existence of coverage under the CGL policy. See Dart Industries v Commercial Union (2002) 28 Cal. 4th 1059. So, if you have a lost policy or only a partial policy you may still be able to prove the existence of coverage via secondary evidence, but you need to first establish that a diligent search was made to try and find the policy.