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School's lost AIG policy existed: Court

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School's lost AIG policy existed: Court

A New Hampshire middle school has presented plausible evidence that it had a nearly 50-year-old commercial general liability policy with an American International Group Inc. unit, even though no one can find a copy of it, says a U.S. appeals court in reversing dismissal of the case.

In 2013, the Cardigan Mountain School, a private middle school in Canaan, New Hampshire, received a demand letter asserting a claim — about which no further details have been provided — based on events that allegedly occurred during the 1967-1968 school year, according to Wednesday's ruling by the 1st. U.S. Circuit Court of Appeals in Boston in Cardigan Mountain School v. New Hampshire Insurance Co.

In response, the school asked New York-based New Hampshire Insurance, a unit of AIG, to defend it against the claim as the school's comprehensive general liability insurer at that time.

“The twist is that while the school can document that it had policy with the insurance company at some point, it cannot find a copy of the policy for the year in question,” said the ruling.

New Hampshire Insurance responded it had no duty to defend the claim because it has not been able to find any policy covering the school during the relevant time period and, therefore, was not the school's insurer at that time.

The school filed suit in New Hampshire state court, seeking a declaratory judgment on the policy's existence. The case was transferred to U.S. District Court in Concordia, New Hampshire, which dismissed the case, ruling that the schools complaint “did not plausibly show the existences of the policy,” according to the appeals court ruling.

The appellate ruling states that while the school's complaint does not include a “direct allegation” that the insurance policy existed, it relies on circumstantial evidence, including inferring $1 million in general liability coverage at that time based on a 1971 audit report prepared by an accounting firm.

“In our view, although the question is close, the school's allegations and the 'reasonable inferences' we must draw from them … do make a plausible showing that the New Hampshire Insurance Company issued an insurance policy to the school for the 1967-1968 school year,” said a unanimous three-judge panel, in citing an earlier ruling.

“The factual allegations are 'circumstantial,' to be sure, but here is no requirement for direct evidence,” said the appeals court, in remanding the case for further proceedings.

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