You are organizing a home office. You have a “Shred” pile and a “Keep” pile. In the zone, you accidentally feed the client’s original Last Will and Testament and Property Deed into the shredder. The client is panic-stricken. Recreating these legal documents will cost thousands in legal fees.
Key Takeaways
- Valuable Papers Coverage: Standard GL pays for the cost of the paper ($0.05). It does not pay for the legal cost to recreate the document unless you have “Valuable Papers” coverage.
- Professional Liability (E&O): This was a mistake in your organizing service. E&O is the primary policy that covers the financial harm caused by your error.
- Identity Theft Risk: If you take the shredding off-site and lose it, that’s a data breach. Keep shredding on-site or use a bonded truck.
- Sorting Protocols: Negligence is proven if you didn’t have a “Client Verification” step before shredding.
The “Why” (The Trap): The Cost of Replacement
The paper is worthless. The information is expensive.
Recreating a deed involves a lawyer, a title search, and filing fees. Recreating a Will involves a lawyer.
The Trap: General Liability excludes “Intangible Property” (the legal value of the deed). You need a policy that specifically covers “Cost to Reconstruct” documents.
The Investigation: Shredding Insurance
I checked specialized Organizer policies.
1. NAPO Insurance (Westminster)
- My Analysis: Includes coverage for “loss of documents.”
- Limit: Check the sub-limit. It might be $25,000.
2. General Liability
- My Analysis: Pays for the physical paper. Effectively $0.
3. Cyber/Data Liability
- My Analysis: If you shred a hard drive, this applies. For paper, “Valuable Papers” is the correct term.
Comparison Table: Document Loss
| Document | Cost to Replace | GL Pays | E&O/Valuable Papers Pays |
| Utility Bill | $0 | $0 | $0 |
| Passport | $200 | $0 | $200 |
| Property Deed | $1,500 | $0 | $1,500 |
Step-by-Step Action Plan
- The “Touch Once” Rule: Do not shred anything yourself. Create a “To Shred” bag and make the client put it in the machine or take it to the facility.
- Liability Release: Contract: “Organizer is not responsible for inadvertent disposal of documents placed in ‘Trash/Shred’ piles by Client.”
- Valuable Papers Rider: Add this to your policy for $50/year.
- Immediate Lawyer: If you shred a Will, offer to pay for the lawyer immediately to show good faith.
FAQ Section
Can I tape it back together?
For a Will? No. It usually needs to be re-executed to be legal.
What if I take the shredding home and lose it?
That is a massive privacy breach. Never take client documents to your home.
Does this cover cash found in the shredder?
No. Cash is almost always excluded from all policies.