Insurers May Pay for More Toxic Cleanups : Regulation: All those that issued policies covering firms from the time the pollution began may share in the liability, a court rules.

In a potentially broad victory for companies facing toxic cleanups, a California appeals court has clarified the responsibility of insurance companies to help pay for costs associated with environmental damage.

Until now, insurers have argued that only policies in effect when the environmental damage became known--not when the pollution began, or as it continued--were liable to reimburse companies for often expensive cleanup costs.

Under the ruling, filed last week by the State Court of Appeal in Los Angeles, all insurers who issued policies covering companies from the time the pollution began may share in the liability.

Insurers had used the lack of a decisive legal ruling to deny coverage to many California companies confronted with lawsuits brought by environmental regulators and others. The landmark ruling came in a case brought by the former Montrose Chemical Corp. of Los Angeles against Admiral Insurance Co. of Cherry Hill, N.J.

“This decision will release literally billions of dollars from insurance carrier coffers,” said David L. Mulliken of the San Diego office of Latham & Watkins, which represented the chemical company.

Seven different insurers covered Montrose Chemical--which produced DDT for pesticides from 1947 to 1982--under comprehensive general liability policies. Admiral was the last. Montrose has been sued for personal injury and property damage for dumping toxic waste at the Stringfellow Acid Pits in Riverside.

“It’s a stunning victory (for claimants) because insurers will now have to take their claims seriously,” said attorney Michele E. Flurer, a specialist in environmental insurance claims in the Los Angeles office of Baker & McKenzie. “And I think other states will look at this verdict and use it.”

Admiral Insurance declined comment Wednesday.