A client purchased a company which had, since the 1920s, manufactured agricultural machinery. The purchase came with a complete Employers’ Liability (EL) insurance history dating back to 1933, since which time the insurance had been held by Midland Assurance, Eagle Star, and Zurich. Through InSolutions they also traced their Public Liability (PL) and Products liability coverage back to the 1960s (prior to which no coverage existed).
The client exported 40% of their product to the United States, Canada and Australia, and owned sales outlets within each of those countries. All manufacturing was based in the UK and the Balkans. Two years after purchase, the company received a total of 117 class action claims in 4 separate US states, liability being based on goods exported to America from 1962 onwards. Asbestos gaskets and brake linings were fitted in the machinery.
The UK company became one of 21 potential targets for the US lawyers and it was estimated that the legal cost of defending the claims could finally exceed US$ 1 million, and the courts would consider the sales companies it owned in America as company assets. Their solicitors advised that technically if they failed to pay the claims not only could they be forced to dissolve their American companies, but there was a threat that the adverse publicity could severely reduce their American trading base, or at worst that the States in question could withdraw their licences to operate.
From the records held it was known that the British policies did not provide cover for goods exported to the US and had UK jurisdiction clauses, restricting any claims to those brought in British courts.
InSolutions deduced that coverage was probably placed directly in America, either through the agents who arranged the imports, or by the company established in the US in 1962. Through historic brokers Sedgwick Collins, we traced excess layer general liability cover for the company for the period from 1965 to 1975. These documents proved the identity and policy number of the primary American carrier.
Without tracing such coverage the clients could have faced claims for a risk they had never anticipated.
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