Maybe. In long-tail claims like asbestos, which implicate multiple policy periods, insurers and policyholders often contend fiercely over the allocation of defense and indemnity among triggered policies. Insurers vie for pro rata allocation, which typically spreads the costs evenly across triggered policies, and possibly across periods where there was no insurance. Under this methodology, each insurer only pays a sliver of the costs, and, in some jurisdictions, the policyholder is on the hook for uninsured periods. Policyholders, in contrast, pursue an “all sums” allocation, which is based on standard policy language requiring each insurer to pay “all sums the policyholder becomes legally obligated to pay. Under this approach, policyholders can pick any triggered policy to cover the entire claim, and thus typically avoid paying anything. Needless to say, the allocation methodology adopted in a particular jurisdiction has monumental financial implications for both insurers and policyholders.  The law on allocation differs state to state: some adopt a form of pro-rata allocation, others implement all sums, and still others remain undecided.

In 2011, South Carolina adopted an extreme form of pro rata allocation for long-tail property damage claims. See Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40, 52-53 (2011).  Under Crossman, practically speaking, a long-tail property damage claim is spread across the entire period triggered by the claim, regardless of whether the policyholder could have purchased insurance for the claim in every triggered year. Thus, if a claim triggers 10 years of coverage, the policyholder bought all available insurance in 5/10 years, but insurance was not available in the other 5/10 years, the policyholder is responsible for 50% of the loss, even though the insurance the policyholder did purchase says the insurer will pay “all sums.”  In adopting this methodology, courts typically rely on the fiction that the policies only cover damage or bodily injury that occurs “during the policy period” (and not before or after), together with misguided equitable notions of fairness, etc.

The Crossman methodology is particularly harsh on policyholders in the context of long-tail environmental or asbestos litigation.  A typical asbestos bodily injury claim implicates the time period from first exposure to asbestos in the 1960s or 1970s up to today – a period of 65 years or more.  Insurance for asbestos claims became generally unavailable in the mid-1980s.  Thus, if a policyholder bought all available “all sums” insurance from the 1960s to the mid-1980s, but could no longer buy any insurance for asbestos claims as of the mid-1980s, under the logic of Crossman, the policyholder could be liable for 40/65 of the years implicated, which is around 2/3 of defense and indemnity costs.  For numerous reasons I will not address here, this is a ridiculous outcome that is totally inconsistent with insurance policy language and equitable considerations.  Nonetheless, this is the law in many states.

A recent South Carolina Appellate Court case, however, appears to upend the insurer-friendly allocation methodology in Crossman in the case of certain asbestos claims.  See Peter D. Protopapas, as Receiver for Starr Davis Company, Inc. and Starr Davis Company of S.C., Inc. v. Travelers Casualty, et al., South Carolina Court of Appeals, case no. 2021-000648 (May 14, 2025). 

Starr Davis, a construction company established in 1932, installed insulation that allegedly contained asbestos.  The business eventually dissolved in the 1990s.  In 2019, a plaintiff in an asbestos lawsuit sought and obtained the appointment of a receiver for Starr Davis in South Carolina.  The receiver pursued coverage for the asbestos claims from Starr Davis’ pre-1985 insurers, including Travelers.  In the ensuing lawsuit, Starr Davis argued that the all sums methodology, not the insurer-friendly pro rata approach of Crossman, should apply due to the company’s financial hardship. Starr Davis asserted that, although the Crossman pro rata methodology was the default rule, the trial court could deviate from this methodology in its discretion. The trial court sided with Starr Davis: because Travelers allegedly had forty years of uninterrupted coverage, and Starr Davis was in receivership with no assets other than insurance coverage, the all sums methodology was appropriate.  The appellate court affirmed the trial court’s ruling; it found that the methodology in Crossman was a judicially created, equitable method that could be altered depending on the circumstances.

Travelers filed a motion to reconsider, which the appellate court denied on June 20, 2025.  Presumably Travelers will file a Petition for Certiorari with the South Carolina Supreme Court, which is due by July 20, 2025. 

If Starr Davis is upheld, it may provide a lifeline to policyholders facing financial hardship in jurisdictions that currently apply a pro rata methodology for long-tail claims such as property damage, environmental, and asbestos bodily injury.  Further, in jurisdictions without established allocation law, Starr Davis highlights an argument policyholders should consider when making the case for adoption of an all sums methodology.  

Disclaimer: This case summary is provided for informational purposes only and does not constitute legal advice. Polales Horton & Leonardi LLP is experienced in handling complex insurance coverage matters on behalf of policyholders across the United States. To discuss your specific insurance coverage issue, please contact Jacob M. Mihm.