The House of Lords has found against the insurers in the eagerly awaited Fairchild judgment.
The Lords overruled the High Court and Court of Appeal decisions that, if the fatal fibre could not be traced to a particular employer, mesothelioma victims could not claim at all.
Construction workers union UCATT has estimated the judgment will cost insurers between £6bn and £8bn in compensation to victims in coming years. However, the Association of British Insurers (ABI) called this an irresponsible and wild exaggeration. It calculated a figure of £200m a year.
UCATT named Eagle Star, Norwich Union and Iron Trades in its claim.
It said about 500 cases, held awaiting the judgment, would now be able to go ahead.
Insurers had been accused recently of attempting to derail the justice system for offering Fairchild, Fox and Matthews eleventh-hour full settlements and agreeing to set up a compensation scheme, days before the Lords were due to hear the case.
The case went ahead when Mrs Fox refused the settlement, which had to be accepted by all three to go ahead.
The case was known as Fairchild after UCATT member Arthur Fairchild, who died in 1996 after being exposed to asbestos while working for two different organisations.
His wife Judith would have missed out on compensation for his death if the Lords had upheld the Appeal Court decision that, because it was impossible to know which organisation had exposed Fairchild to the fibre of asbestos that precipitated his mesothelioma, neither organisation could be held liable.
Weightmans Vizard partner Dr Tony Prichard said it was unlikely a written judgement would be released until July.
He said it was impossible to know on what basis the appeal had been upheld, which meant the status quo would revert to the Bryce judgment, which would mean the last insurer remaining would pay the claim, or the Holtby judgment, which worked on a time exposed basis.
"It was inevitable that something had to be done because the situation was unacceptable," Prichard said.
"They upheld the appeal but we don't know yet on what basis."
UCATT leader George Brumwell blasted insurers following this afternoon's judgment.
"Insurance companies have to accept their responsibilities,"
he said. "They have been shamed by this decision."
ABI general insurance head John Parker said insurers welcomed the clarity provided by the ruling and vowed that they would pay compensation within the law set down today.
He said the ABI would study the judgment and advise members of their course of action as soon as possible.
The Association of Personal Injury Lawyers (APIL) president Patrick Allen said the decision was a huge relief to mesothelioma sufferers
"Their families that they will now be free to pursue the compensation they so desperately need," he said.
