Insights & Events

Insurance coverage disputes arising from decades-old liabilities often present a recurring problem: the insured faces long-tail claims that could trigger insurance policies issued years or even decades ago, but the insurers cannot (or do not) produce complete copies of the policies they issued. When insurers fail to produce complete policy documents, courts must determine how to reconstruct the governing terms, who bears the burden of proving exclusions or aggregate limits, and how loss should be allocated across multiple years of coverage. Where coverage litigation reaches back to policies sold years before, some state courts will make presumptions in favor of the policyholder where an insurer has failed to maintain and produce relevant policies.

The Supreme Court of South Carolina did just that when it recently declined to review a 2025 Court of Appeals decision that found an insured had established coverage despite missing and incomplete policies. Protopapas v. Travelers Cas., 2026 S.C. LEXIS 30 (Feb. 11, 2026). The case arose from a coverage dispute between the receiver of defunct asbestos company Starr Davis and its insurers. Protopapas v. Travelers Cas. & Sur. Co., 916 S.E.2d 844 (S.C. Ct. App. 2025), reh’g denied (June 20, 2025), cert. denied (Feb. 11, 2026). Starr Davis, which fabricated, sold, and installed insulation products, ceased active operations in 1997 but remains subject to ongoing asbestos tort litigation. Id. at 846, 846 n.1.

In 2019, asbestos plaintiffs obtained the appointment of a receiver to administer Starr Davis’s sole remaining asset: its insurance coverage. Id. at 846. The Receiver sued the company’s insurers, now part of Travelers Casualty and Surety Co., seeking declaratory relief and asserting breach of contract. Id. at 846-47. The insurers had issued policies to Starr-Davis for forty years. Id. at 847-48. However, during discovery, the insurers produced only twenty-two policies, some of which were incomplete, while others were missing, requiring the receiver to persuade the trial court to infer the terms of the missing policies. Id. at 846-47. The trial court granted partial summary judgment to the Receiver, and the Court of Appeals affirmed the coverage rulings.

On appeal, Travelers argued the court improperly granted the Receiver’s motion for summary judgment because the insured did not present complete copies of policies; the available policies lacked some forms and endorsements. Id. at 849. The Court of Appeals rejected that argument and affirmed the trial court’s coverage determinations. Id. It emphasized that Travelers possessed its own copies of many policies when responding to the motion, yet failed to submit any additional policies beyond those the plaintiff provided, nor did it provide any other evidence supporting its claim that the policy terms changed in later years. Id. The Court of Appeals also said Travelers was “inaccurate” in asserting the trial court relied upon only two policies in making its findings, as the Receiver had properly “filed under seal other underlying documentation produced by Travelers” in accordance with the rules of evidence. Id. at 849 n.3. The Court of Appeals observed that Travelers itself had supplied the incomplete policies that the Receiver cited, and that the gaps existed because Travelers failed to retain or produce complete copies. Id. at 849. That failure, the court explained, is precisely what “necessitated that the circuit court fill in the gaps by piecing together what Travelers did produce.” Id. The Court of Appeals agreed with the trial court’s observation that “[i]nsurance documentation is integral to the functioning of an insurance organization. It is not integral to the functioning of an insulation contractor.” Id.

The Court of Appeals likewise affirmed the trial court’s allocation of the burden of proof to the insured initially to show a loss falls within coverage and then to the insurer to establish an exclusion or limitation restricting or defeating that coverage. Id. at 857. Travelers bore the burden of proving the applicability of aggregate policy limits to particular claims because aggregate limits operate to restrict coverage. Id. The Court of Appeals further supported placing the burden on Travelers to prove which asbestos claims were subject to aggregate limits or any other exclusion or limitation “because certain insurers in the asbestos coverage arena historically destroyed coverage documentation pursuant to an intentional scheme seeking to thwart legitimate claims,” necessitating the reconstruction of potentially applicable coverage by extrapolating from the limited policies available and filling in missing or incomplete provisions. Id.

Separately, the Court of Appeals considered issues regarding loss allocation, applying a fact-specific hybrid approach that preserved coverage. Jurisdictions generally apply one of two distinct approaches to allocation: time-on-the-risk, which is often more favorable for insurers; or all-sums, which is often more favorable for policyholders. The court noted that South Carolina generally follows a time-on-the-risk approach, under which liability is prorated across triggered policy periods, but emphasized that this framework is a judicially created default rule designed to achieve equitable results. Id. at 853-55. The trial court found it appropriate to depart from strict pro rata allocation given that Travelers provided uninterrupted coverage to Starr Davis for forty years and that the insured, now in receivership, had no assets other than insurance. Id. at 854-55. It further recognized that the policies typically obligate insurers to pay all sums that the insured is legally obligated to pay for bodily injury occurring during the policy period. Id. at 854-55. In light of those considerations, the Court of Appeals held that the trial court did not err in issuing its allocation determination. Id.

In declining to review this opinion, the Supreme Court of South Carolina demonstrated it was unwilling to disturb the Court of Appeals’ holdings that, under these circumstances, a court may make presumptions against an insurer in light of missing and incomplete policy documents, as well as depart from the state’s typical insurer-friendly time-on-the-risk approach to allocation to achieve equitable results for a policyholder and its creditors. See Protopapas, 2026 S.C. LEXIS 30 (Feb. 11, 2026). Insurance law varies significantly from state to state, and this case provides an example of how a state court may apply insurance law flexibly per the needs and circumstances of the case, such as the insolvency of an insured business and certain insurers’ history of intentionally destroying coverage documentation.

— By Donald McMinn, Louis Russo, and Melissa Baney