(Article from Insurance Law Alert, April 2024)
For more information, please visit the Insurance Law Alert Resource Center.
Holding
A South Carolina trial court ruled that all sums allocation and a continuous trigger applied to determine coverage obligations for progressive bodily injury claims arising out of exposure to asbestos. Covil Corp. v. Penn. Nat’l Mutual Cas. Ins. Co., No. 2020-CP-40-02098 (S.C. Ct. Common Pleas Mar. 1, 2024).
Background
This case involved a dispute over the existence, scope and limits of insurance coverage for asbestos personal injury claims against Covil Corporation, a former insulation contractor. After being named as a defendant in numerous lawsuits, Covil sought coverage from Penn National under various policies issued in the 1980s. The parties disputed several key issues, including the appropriate trigger for coverage and the proper method for allocating losses. Following a non-jury trial, the court issued findings of fact and conclusions of law.
Decision
As to allocation, the court endorsed an all sums method, deeming that approach consistent with the policy language. In particular, the court cited language stating that the policies provided coverage for “all sums which the insured shall become legally obligated to pay as damages because of . . . bodily injury . . . [to] which this insurance applies” and defined “bodily injury” to mean “bodily injury, sickness, or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.”
In rejecting a pro rata approach, the court found that none of the operative policy provisions “impose a temporal or proportionate limit on Penn National’s obligation to defend or indemnify Covil for a progressive bodily injury claim.” The court further stated that the inclusion of the phrase “at any time” in the definition of bodily injury supported the conclusion that coverage should not be temporally restricted by policy periods.
With respect to trigger, the court ruled that a continuous trigger applied, such that all policies in effect from a claimant’s first exposure to asbestos through manifestation of disease, and ultimately death, provide coverage unless otherwise excluded. The court reached this conclusion based its reading of on the aforementioned policy language defining “bodily injury,” as well as the definition of “occurrence,” as “an accident including continuous or repeated exposure to conditions.”
Comments
The court expressly distinguished South Carolina precedent endorsing a pro rata allocation approach to progressive property damage claims that spanned multiple policy periods. Crossman Cmtys. Of N.C., Inc. v. Harleysville Mut. Ins. Co., 395 S.C. 40 (2011). The court explained that the policy in Crossman provided coverage for property damage that occurred “during the policy period,” whereas the policies in the present case did not contain such verbiage in the “Insuring Agreement” provision.
It should be noted that in the present case, the phrase “during the policy period” was, in fact, included in the definition of bodily injury (“bodily injury, sickness, or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom”). However, the court found that within that clause, “during the policy period” conflicted with “at any time,” and that in order to “give meaning to all words” and “harmonize[] all elements of the definition,” the phrase “during the policy period” should be interpreted to refer to the trigger of coverage, rather than a temporal limitation on coverage. In other words, the court held that the “during the policy period” clause required only that “some part of the bodily injury must occur during the policy period to trigger the policy.”