South Carolina App / Long-Tail Asbestos Insurance:
Starr Davis was a commercial insulation contractor that is named as a defendant in various asbestos bodily injury claims. The Starr Davis entities ceased doing business in 1997. A South Carolina Circuit Court appointed a Receiver to administer and collect insurance to pay asbestos claims. In addition to finding that South Carolina law applied, the Court of Appeals issued several notable rulings:
Missing Policies: The court determined that Travelers’ failure to maintain and locate missing policies permitted the Receiver to fill in the gaps with secondary evidence. The court reasoned that the secondary evidence was permissible, in part, because Starr Davis was an insulation contractor and not an “insurance organization” like the defendant insurers. While the opinion is fact-specific, it is liberal as to the minimum threshold necessary to establish coverage through secondary evidence.
Allocation: The Court acknowledged previous South Carolina Supreme Court precedent that allocates long-tail progressive injury cases spanning many years based on a “time on the risk” approach. While characterizing the “time on the risk” allocation approach as the “default rule,” the Court of Appeals reasoned that the trial court retained the discretion to alter it “in appropriate circumstances.” It held that the trial court had correctly used its discretion to impose an “all sums” allocation approach due to “legal and equitable considerations involved in allocating loss to a policyholder lacking assets to pay when decades-long coverage exists and the insurance policies at issue contain ‘all sums’ language.”
Operations and Completed Operations: The Appellate Court affirmed the trial court’s ruling that the “completed operations hazard” aggregate limits applied only when a claimant was exposed to asbestos after Starr Davis completed its work at a particular jobsite. Conversely, the “operations” coverage, which has no aggregate limit of liability, applies to any bodily injury as a result of exposure to asbestos when Starr Davis was actually performing work at a particular jobsite.
Occurrences: The Appellate Court opinion concluded that the claims against Starr Davis constituted separate occurrences. It distinguished cases, including those of the South Carolina Supreme Court, which found had held that allegedly defective products placed into the stream of commerce were single occurrences. The Appellate Court opinion held that claims arising from exposure to asbestos due to “operations” of the policyholder generally constitute “multiple occurrences.”