Lexington Insurance Co., a Chartis company, has made its spoliation insurance endorsement available to an array of insureds, including lawyers, accountants, testing facilities, and document and property storage facilities. Coverage is designed to protect against third party claims alleging spoliation of evidence that is material to a legal proceeding.
Lexington first provided coverage for spoliation claims as an endorsement to its professional liability policies for architects and engineers.
Many states recognize a separate spoliation tort action for the destruction, alteration or loss of evidence. For professional liability insureds, spoliation insurance broadens coverage to recognize spoliation as a wrongful act under the policy, providing coverage for the liability that professionals handling evidence face, even when negligence is not alleged. For property insureds, Spoliation insurance changes the way the valuation of lost or damaged property used as evidence is determined. Under spoliation insurance, a loss is valued as the adjudicated damages determined in court – a significant difference from standard property coverage, which values such property at replacement cost or actual cash value.
‘A bolt in a construction project is worth very little in actual cash value,’ said Sanjay Godhwani, executive vice president and property division executive of Lexington Insurance Co. ‘But if it fails and leads to loss of life, it might become evidence in a trial, where it could be worth an exponentially greater amount.’
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