What is asbestos insurance, and where can I buy it?

The problem is that historical asbestos risk is very expensive, and there is almost no current market offering asbestos insurance for historical operations, including the manufacture of asbestos products.  A few major reinsurers will sell you asbestos insurance, but the premiums are incredibly expensive, and the policies frequently contain stop-losses that, if triggered, return the exposure to the policyholder just when things are getting bad again.  These reinsurers, such as National Indemnity (NICO) and other entities related to Berkshire-Hathaway operate on the principle that “if you really, really want or need asbestos insurance, we will sell it to you, and we will charge you far too much.”  This is how Warren Buffett got rich and stays rich.  The only buyers of this kind of asbestos insurance / reinsurance are usually companies that need protection in the context of a merger or sale or purchase of a subsidiary or a company.  Other buyers of asbestos reinsurance are major insurance concerns such as CNA, AIG and Lloyds of London, all of whom are sophisticated purchasers with a unique need to bring calm to their balance sheets burdened by long-term asbestos risk.

If you are being sued for your historical operations that involved asbestos, it is a far more economical solution to search your records by doing “insurance archaeology” to recreate your General Liability and Products Liability coverages in place during the relevant time periods you utilized or sold asbestos.  These historical policies providing asbestos coverage are still available to pay for your current asbestos claims because they were written on an “occurrence basis” which provides coverage for bodily injury or property damage that occurred during the policy term.  Thus, if you sold an asbestos product in 1975 to which a third-party purchaser was exposed in 1975, the general liability / products liability coverage in place during the exposure is triggered and must respond, typically having to provide a free duty to defend the case even if isn’t brought until 2014.

This historical asbestos insurance is an asset you already own and does not require you to pay an exorbitant premium to secure.   In fact, almost all general liability and products liability policies issued up until 1986 provide asbestos coverage.  In and around 1986, asbestos exclusions became prevalent, and by 1988 most all general liability and products policies excluded asbestos.  However, by this time asbestos was generally no longer being sold, so most exposures and their resultant bodily injury are pre-1986 in any event.  This is the best kind of asbestos insurance because it is free and comes without onerous exceptions that insurers have learned over the years to bake into more recent policies.

Remember, historical insurance can be a very valuable asset and you should make every effort to locate it, preserve it, and maximize it.


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