H 3401 Session 110 (1993-1994)
H 3401 General Bill, By R.S. Corning, H. Brown, Cato, H.H. Clyborne, Gamble,
Harrison, Haskins, M.F. Jaskwhich, Meacham, J.S. Shissias, Vaughn and
Young-Brickell
A Bill to amend Title 56, Code of Laws of South Carolina, 1976, relating to
motor vehicles, by adding Chapter 2 so as to enact provisions for the
registration and licensing of uninsured motor vehicles, and by adding Chapter
4 so as to enact the "Motor Vehicle Safety Responsibility Act", including
provisions covering administration and enforcement, security following an
accident, proof of financial responsibility for the future, motor vehicle
liability policies, and the associated automobile insurers of South Carolina,
which is an unincorporated, nonprofit, independent, legal entity for the
providing of automobile insurance for certain insureds; and to repeal Articles
1, 3, and 5, Chapter 77, Title 38, relating to automobile insurance, purposes,
and definitions, the "Mandate to Write" and insurance coverage, and the
Reinsurance Facility and designated producers, Chapter 9, Title 56, relating
to the Motor Vehicle Financial Responsibility Act, and Chapter 10, Title 56,
relating to motor vehicle registration and financial security.
02/04/93 House Introduced and read first time HJ-5
02/04/93 House Referred to Committee on Labor, Commerce and
Industry HJ-5
A BILL
TO AMEND TITLE 56, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO MOTOR VEHICLES, BY ADDING CHAPTER
2 SO AS TO ENACT PROVISIONS FOR THE REGISTRATION AND
LICENSING OF UNINSURED MOTOR VEHICLES, AND BY
ADDING CHAPTER 4 SO AS TO ENACT THE "MOTOR
VEHICLE SAFETY RESPONSIBILITY ACT", INCLUDING
PROVISIONS COVERING ADMINISTRATION AND
ENFORCEMENT, SECURITY FOLLOWING AN ACCIDENT,
PROOF OF FINANCIAL RESPONSIBILITY FOR THE FUTURE,
MOTOR VEHICLE LIABILITY POLICIES, AND THE ASSOCIATED
AUTOMOBILE INSURERS OF SOUTH CAROLINA, WHICH IS AN
UNINCORPORATED, NONPROFIT, INDEPENDENT, LEGAL
ENTITY FOR THE PROVIDING OF AUTOMOBILE INSURANCE
FOR CERTAIN INSUREDS; AND TO REPEAL ARTICLES 1, 3,
AND 5, CHAPTER 77, TITLE 38, RELATING TO AUTOMOBILE
INSURANCE, PURPOSES AND DEFINITIONS, THE
"MANDATE TO WRITE" AND INSURANCE
COVERAGE, AND THE REINSURANCE FACILITY AND
DESIGNATED PRODUCERS, CHAPTER 9, TITLE 56, RELATING
TO THE MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT,
AND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE
REGISTRATION AND FINANCIAL SECURITY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 56 of the 1976 Code is amended by adding:
"CHAPTER 2
Registration and Licensing of
Uninsured Motor Vehicles
Section 56-2-10. As used in this chapter:
(1) `Conviction' also includes the entry of any plea of guilty or nolo
contendere and the forfeiture of any bail or collateral deposited to secure
a defendant's appearance.
(2) `Insured motor vehicle' is a motor vehicle as to which (a) there
is bodily injury liability insurance and property damage liability
insurance, both in the amounts specified in Section 56-4-830, issued by
an insurer authorized to do business in this State, (b) a bond has been
given or cash or securities delivered in lieu of the insurance, or (c) the
owner has qualified as a self-insurer in accordance with the provisions
of Section 56-4-90; and
(3) `Uninsured motor vehicle' is a motor vehicle required to be
registered as to which (a) there is no bodily injury liability insurance
and property damage liability insurance, (b) no bond has been given or
cash or securities delivered in lieu thereof, or (c) the owner has not
qualified as a self-insurer.
Section 56-2-20. In addition to any other fees prescribed by law,
every person registering and licensing an uninsured motor vehicle, as
defined in Section 56-2-10, in this State shall pay, at the time of
registering and licensing an uninsured motor vehicle, a sum to be fixed
by the Chief Insurance Commissioner but not to exceed one hundred
dollars. Credit for payment made on a motor vehicle subsequently
transferred during the same licensing year must be applied to any motor
vehicle thereafter registered by the uninsured motorist during the same
licensing year.
Section 56-2-30. The Department of Highways and Public
Transportation may require that a person applying for licensing and
registration of a motor vehicle shall certify under the penalties set forth
in Section 56-2-110 whether or not each motor vehicle is an insured
motor vehicle as defined in Section 56-2-10, or the department may in
its discretion require that a person (a) produce as evidence of financial
responsibility a certificate on a form prescribed by the department of
insurance or self-insurance complying with the requirements of Section
56-4-90, (b) has given bond or delivered the cash or securities as
provided in Sections 56-4-660 and 56-4-670, respectively, or (c) pay the
fee prescribed in Section 56-2-20.
Section 56-2-40. Upon the termination of insurance by cancellation
or failure to renew, notice of the cancellation or other termination must
be filed by the insurer with the department not later than five days
following the effective date of the cancellation or other termination.
Section 56-2-50. The department shall, upon receipt of the notice of
cancellation or termination provided for in Section 56-2-40, revoke the
certificate of registration and license plates of the motor vehicle with
respect to which the policy was in force, unless the owner either gives
evidence that the vehicle is an insured vehicle in the manner provided
in Section 56-2-30 or pays the fee provided in Section 56-2-20.
Section 56-2-60. All funds collected by the department under the
provisions of this chapter must be deposited to the credit of the State
Treasurer and monthly transferred to a special deposit fund to be known
as the `Uninsured Motorists Fund' to be disbursed as provided in Section
56-2-70 to 56-2-90.
Section 56-2-70. The fund is under the supervision and control of the
Chief Insurance Commissioner and must be paid out, on warrants of the
Comptroller General issued on vouchers signed by the commissioner or
persons he designates, for the purpose of defraying the costs of
administration of this chapter and chapters of this title by the department
and for reducing the costs of the endorsement or provisions provided in
Section 56-2-80.
Section 56-2-80. The Chief Insurance Commissioner annually, at the
time during each year he considers best, shall make distribution from the
fund as follows:
(1) to the department, the amount certified by it as its administrative
costs and expenses for this chapter and Chapter 4 of this title. These
payments may be made on a quarterly basis.
(2) Among the several insurance companies writing motor vehicle
bodily injury and property damage insurance on motor vehicles
registered in this State, the balance of the fund, subject to the limitations
of Sections 56-2-70 to 56-2-90, after taking out the administrative costs
to be paid to the department. Distribution among the insurance
companies must be in the proportion that the number of policies issued
by each insurance company bearing the endorsement or provision
required to be made available to policyholders pursuant to Section 56-4-840 bears to the total number of the policies bearing the endorsement or
provision written in this State during the preceding year. The total
amount to be distributed among the insurance companies for any year
may not exceed the aggregate amount of loss experienced by the
companies under the endorsements or provisions, as determined by the
Chief Insurance Commissioner, during the year for which the
distribution is made. The amount payable to any insurance company
under this section applies only to those companies maintaining records
satisfactory to the commissioner.
Section 56-2-90. If the amount in the fund exceeds the amount
distributable to the department and among the insurance companies or
if, for any reason, the funds cannot be expended, the balance remaining
in the fund must be held in reserve in the fund with the State Treasurer
against years in which there may be a deficit. If the fund in any year is
insufficient to pay the administrative costs and the aggregate amount of
loss experienced by the several insurance companies, as defined in
Section 56-2-30, the insurance companies have a proportionate claim
against the fund and must be paid the difference during any succeeding
year that the fund has a surplus.
Section 56-2-100. The Chief Insurance Commissioner may
promulgate regulations necessary to implement the provisions of this
chapter.
Section 56-2-110. A person who knowingly makes a false certificate
as to whether a motor vehicle is an insured motor vehicle or gives to the
department false evidence that any motor vehicle sought to be registered
is insured is guilty of a misdemeanor and, upon conviction, must be
fined not less than five hundred dollars or imprisoned for ninety days.
The department shall deny, for six months, registration of any motor
vehicle for which a false certificate or false evidence is presented to the
effect that the vehicle is insured and shall revoke, and may not thereafter
reissue for six months, the driver's license of a person making a false
certificate or offering false evidence as specified in this section.
Section 56-2-120. This chapter does not repeal any other provision
contained in this title, but is cumulative to such other provisions."
SECTION 2. Title 56 of the 1976 Code is amended by adding:
"CHAPTER 4
Motor Vehicle Safety Responsibility Act
Article 1
General Provisions
Section 56-4-10. This chapter may be cited as the `Motor Vehicle
Safety Responsibility Act'.
Section 56-4-20. As used in this chapter:
( 1) `Conviction' also includes the entry of any plea of guilty or nolo
contendere and the forfeiture of bail or collateral deposited to secure a
defendant's appearance in court.
( 2) `Department' means the Department of Highways and Public
Transportation acting directly or through its authorized officers and
agents.
( 3) `Insured motor vehicle' means, except in Article 9 of this
chapter, a motor vehicle as to which there is bodily injury liability
insurance and property damage liability insurance, both in the amounts
required by law, issued by an insurer authorized to do business in this
State, or as to which a bond has been given or cash or securities
delivered in lieu of the insurance or as to which the owner has qualified
as a self-insurer in accordance with the provisions of Section 56-4-90.
( 4) `Judgment' is any judgment which has become final by
expiration without appeal of the time within which an appeal might have
been perfected or by final affirmance on appeal, rendered by a court of
competent jurisdiction of any state of the United States, upon a cause of
action arising out of the ownership, maintenance, or use of any motor
vehicle, for damages, including damages for care and loss of service,
because of bodily injury to or death of a person or for damages because
of injury to or destruction of property, including the loss of use thereof,
or upon a cause of action on an agreement for such damages.
( 5) `License' is any license, temporary instruction permit, or
temporary license issued under the laws of this State pertaining to the
licensing of persons to operate vehicles.
( 6) `Motor vehicle' is every self-propelled vehicle which is designed
for use upon a highway, including trailers and semitrailers designed for
use with the vehicles, but excepting traction engines, road rollers, farm
tractors, tractor cranes, power shovels, and well drillers.
( 7) `Motor vehicle liability policy' is an owner's or an operator's
policy of liability insurance, certified as provided in Section 56-4-640
or 56-4-650 as proof of financial responsibility and issued, except as
otherwise provided in Section 56-4-650, by an insurer authorized to
transact business in this State, to or for the benefit of the person named
in it as insured.
( 8) `Nonresident' means every person who is not a resident of this
State.
( 9) `Nonresident operating privilege' is the privilege conferred upon
a nonresident by the laws of this State pertaining to the operation by him
of a motor vehicle or the use of a motor vehicle owned by him in this
State.
(10) `Operator' means a person who is in actual physical control of a
motor vehicle, whether or not licensed as an operator or chauffeur under
the laws of this State.
(11) `Owner' is a person who holds the legal title of a motor vehicle,
or, if a motor vehicle is the subject of an agreement for the conditional
sale or lease thereof with the right of purchase upon performance of the
conditions stated in the agreement and with an immediate right of
possession vested in the conditional vendee or lessee or in the event a
mortgagor of a vehicle is entitled to possession, then the conditional
vendee or lessee or mortgagor is considered the owner for the purposes
of this chapter.
(12) `Person' means a natural person, firm, partnership, association,
or corporation.
(13) `Proof of financial responsibility' means proof of ability to
respond in damages for liability on account of accidents occurring after
the effective date of the proof, arising out of the ownership,
maintenance, or use of a motor vehicle, in the amount of fifteen
thousand dollars because of bodily injury to or death of one person in
any one accident and, subject to the limit for one person, in the amount
of thirty thousand dollars because of bodily injury to or death of two or
more persons in any one accident and in the amount of five thousand
dollars because of injury to or destruction of property of others in any
one accident.
(14) `Registration' means registration certificates and registration or
license plates issued under the laws of this State pertaining to the license
and registration of motor vehicles.
(15) `State' means any state, territory, or possession of the United
States, the District of Columbia, or any Canadian province.
(16) `Uninsured motor vehicle' means, except in Article 9 of this
chapter, a motor vehicle as to which there is no bodily injury liability
insurance and property damage liability insurance as described in item
(3) of this section or no bond has been given or cash or securities
delivered in lieu thereof as described in that item or the owner of which
has not qualified as a self-insurer in accordance with the provisions of
Section 56-4-90.
Section 56-4-30. This chapter must be construed to effectuate its
general purpose to make uniform the laws of those states which enact
substantially identical legislation.
Section 56-4-40. This chapter does not apply with respect to any
motor vehicle owned by the United States, this State, or any political
subdivision of this State, nor, except for Section 56-4-310, 56-4-410,
and 56-4-680, does it apply with respect to any motor vehicle which is
subject to other laws of this State which require their owners to carry
insurance or to place security in a manner which would make those
owners carry insurance or place security in addition to the amounts
required by this chapter.
Section 56-4-50. This chapter does not affect the rights of any
conditional vendor, chattel mortgagee, or lessor of a motor vehicle
registered in the name of another as owner who becomes subject to the
provisions of this chapter.
Section 56-4-60. This chapter does not prevent the owner of a motor
vehicle, the registration of which has been suspended under this chapter,
from effecting a bona fide sale of the motor vehicle to another person
whose rights or privileges are not suspended under this chapter nor
prevent the registration of the motor vehicle by the transferee.
Section 56-4-70. Nothing in this chapter may be construed to prevent
the plaintiff in any action at law from relying for relief upon the other
processes provided by law.
Section 56-4-80. This chapter may in no respect be considered as a
repeal of any other provision contained in this title or the motor vehicle
laws of this State but must be construed as supplemental and cumulative
thereto.
Section 56-4-90. A person in whose name more than twenty-five
motor vehicles are registered may qualify as a self-insurer by obtaining
a certificate of self-insurance issued by the department as provided in
this section. The department may, in its discretion, upon the application
of the person, issue a certificate of self-insurance when it is satisfied that
the person is possessed and will continue to be possessed of ability to
pay judgments obtained against him. Upon not less than five days'
notice and a hearing pursuant to the notice the department may, upon
reasonable grounds, cancel a certificate of self-insurance. Failure to pay
any judgment within thirty days after the judgment becomes final
constitutes a reasonable ground for the cancellation of a certificate of
self-insurance.
Section 56-4-100. A person who forges or, without authority, signs
any notice provided for under Sections 56-4-320 to 56-4-340 that a
policy or bond is in effect or any evidence of proof of financial
responsibility, or who files or offers for filing any such notice or
evidence of proof, knowing, or having reason to believe, that it is forged
or signed without authority, is guilty of a misdemeanor and, upon
conviction, must be fined not more than two thousand dollars or
imprisoned not more than two years, or both.
Section 56-4-120. A person who violates any provision of this
chapter, for which no penalty is otherwise provided, is guilty of a
misdemeanor and, upon conviction, must be fined not more than five
hundred dollars or imprisoned not more than ninety days.
Section 56-4-130. This chapter does not apply to any accident or
judgment arising therefrom or violation of the motor vehicle laws of this
State occurring before January 1, 1995.
Article 3
Administration and Enforcement
Section 56-4-210. The department shall administer and enforce the
provisions of this chapter and may promulgate regulations necessary for
its administration.
Section 56-4-220. Where appropriate, provisions of Chapter 23 of
Title 1 apply with respect to contested cases of administrative
procedures arising under this chapter.
Section 56-4-230. The department shall, upon request, furnish a
person a certified abstract of the operating record of a person subject to
the provisions of this chapter, which also fully designates the motor
vehicles, if any, registered in the name of that person. If there is no
record of any conviction of that person for violating any laws relating to
the operation of a motor vehicle or of any injury or damage caused by
that person, the department shall so certify. These abstracts are not
admissible as evidence in any action for damages or criminal
proceedings arising out of a motor vehicle accident.
Section 56-4-240. A person (1) whose license and registration has
been suspended as provided in this chapter, (2) whose policy of
insurance or bond, when required under this chapter, has been canceled
or terminated, or (3) who has neglected to furnish other proof upon
request of the department shall immediately return his license and
registration to the department. If any person fails to return to the
department his license or registration as provided in this section, the
department may secure its possession by a highway patrolman.
A person wilfully failing to return his license or registration as
required in this section is guilty of a misdemeanor and, upon conviction,
must be fined three hundred dollars or imprisoned sixty days.
Section 56-4-250. After consultation with insurers authorized to
issue automobile liability policies in this State, the Chief Insurance
Commissioner shall approve a reasonable plan or plans for the equitable
apportionment among the insurers of applicants for the policies and for
motor vehicle liability policies who are in good faith entitled to the
policies but are unable to procure them through ordinary methods or
who desire to obtain coverage under the provisions of this section. Any
plan must include the establishment of uniform premium rates as to each
class of risk, based on the combined loss experience of all companies
who participate in the Associated Automobile Insurers plan, on their risk
experience as a separate class. All insureds must be insured uniformly
within every classification; there may be no discrimination whatsoever.
When the plan has been approved, all insurance companies shall
subscribe to and participate in it. Any person aggrieved under this
section by any order or act of the commissioner may appeal the order or
act as a contested case under the provisions of Chapter 23 of Title 1.
If the plan contains a provision that under certain circumstances the
carrying insurer shall offer to renew coverage for one year under a
policy form issued to risks not participating in the Associated
Automobile Insurers plan, subject to the rates, minimum premiums, and
classifications in force for these risks, the insured may request an agent
of his choosing to help complete the transaction and any subsequent
renewals or changes, and the agent may charge the insured a fee of not
more than ten percent of the premium involved. No fee may be charged
if the carrying company recognizes the agent as producer of record and
pays him not less than ten percent commission.
Article 5
Security Following Accident
Section 56-4-310. The driver of a vehicle involved in an accident
resulting in injury to or death of any person or total property damage to
an apparent extent of two hundred dollars or more, within five days after
the accident, shall forward a written report of the accident to the
department as required by law. The report must contain information to
enable the department to determine whether the requirements for the
deposit of security under Section 56-4-320 are inapplicable by reason of
the existence of insurance or other exceptions specified in this chapter.
Section 56-4-320. The department upon receipt of a report of a
motor vehicle accident in this State which has resulted in bodily injury
or death or damage to the property of any one person in excess of two
hundred dollars shall, within sixty days after the receipt, suspend the
license of each operator or driver and all registrations of each owner of
a motor vehicle involved in the accident and, if the operator or driver is
a nonresident, the privilege of operating a motor vehicle in this State and
the privilege of the use within this State of any motor vehicle owned by
him, unless: (1) the operator, driver, or owner, or both, deposits security
in a sum not less than two hundred dollars or an additional amount as the
department specifies that is sufficient to satisfy any judgment that may
be recovered for damages resulting from the accident which may be
recovered against the operator or owner and (2) the owner and operator
shall immediately give and thereafter maintain proof of financial
responsibility on all motor vehicles owned or operated by them. Notice
of the suspension must be sent by the department to the operator and
owner at least ten days before the effective date of the suspension and
must state the amount required as security.
Section 56-4-330. Section 56-4-320 does not apply to any of the
following:
(1) to the operator or owner if the owner had in effect at the time of
the accident an automobile liability policy with respect to the motor
vehicle involved in the accident;
(2) to the operator, if not the owner of the motor vehicle, if there
was in effect at the time of the accident an automobile liability policy or
bond with respect to his operation of motor vehicles not owned by him;
(3) to the operator or owner if the liability of the operator or owner
for damages resulting from the accident is, in the judgment of the
department, covered by any other form of liability insurance policy or
bond;
(4) to any person qualifying as a self-insurer under Section 56-4-90;
(5) to the operator or owner of a motor vehicle involved in an
accident in which no injury or damage was caused to the person or
property of anyone other than the owner or operator;
(6) to the owner of a motor vehicle if at the time of the accident the
vehicle was being operated without his permission, express or implied,
or was parked by a person who had been operating the motor vehicle
without his permission, express or implied;
(7) if, before the date that the department would otherwise suspend
the license and registration or nonresident's operating privilege under
Section 56-4-320, there must be filed with the department evidence
satisfactory to it that the person who would otherwise have to file
security (a) has been released from liability, (b) has been finally
adjudicated not to be liable, (c) has executed a warrant for confession of
judgment, payable when and in installments the parties have agreed to,
or (d) has executed a duly acknowledged written agreement, providing
for the payment of an agreed amount in installments, with respect to all
claims for injuries or damages resulting from the accident; or
(8) to the owner of any legally parked vehicle when struck by
another vehicle.
Section 56-4-340. No policy or bond is effective under Sections 56-4-320 and 56-4-330 unless issued by an insurer or surety company
authorized to do business in this State, except that if the motor vehicle
was not registered in this State or was a motor vehicle which was
registered elsewhere than in this State at the effective date of the policy
or bond or the most recent renewal thereof, the policy or bond is not
effective under Sections 56-4-320 and 56-4-330 unless the insurer or
surety company, if not authorized to do business in this State, executes
a power of attorney authorizing the department to accept service on its
behalf of notice or process in any action upon the policy or bond arising
out of the accident. Every policy or bond must be subject, if the
accident has resulted in bodily injury or death, to a limit, exclusive of
interest and costs, of not less than fifteen thousand dollars because of
bodily injury to or death of one person in any one accident and, subject
to this limit for one person, to a limit of not less than thirty thousand
dollars because of bodily injury to or death of two or more persons in
any one accident and, if the accident has resulted in injury to or
destruction of property, to a limit of not less than five thousand dollars
because of injury to or destruction of property of others in any one
accident.
Section 56-4-350. The license and registration and nonresident's
operating privilege suspended as provided in Section 56-4-320 must,
except as otherwise provided in Section 56-4-410, remain suspended and
may not be renewed, nor may any license or registration be issued to
him, until:
(1) he deposits, or there is deposited on his behalf, the security
required under Section 56-4-320;
(2) two years have elapsed following the date of the accident and
evidence satisfactory to the department has been filed with it that during
that period no action for damages arising out of the accident has been
instituted; or
(3) evidence satisfactory to the department has been filed with it of
a release from liability, a final adjudication of nonliability, a warrant for
confession of judgment, or a duly acknowledged written agreement, in
accordance with Section 56-4-330(7). If there is any default in the
payment of any installment under any confession of judgment, then,
upon notice of default, the department shall suspend the license and
registration or nonresident's operating privilege of the person defaulting,
which may not be restored until the entire amount provided for in
confession of judgment has been paid. If there is any default in the
payment of any installment under any acknowledged written agreement,
then, upon notice of default, the department shall suspend the license
and registration or nonresident's operating privilege of the person
defaulting, which may not be restored until (a) he deposits and thereafter
maintains security as required under Section 56-4-320 in the amount the
department determines or (b) two years have elapsed following the date
when the security was required and during that period no action upon the
agreement has been instituted in a court in this State.
Section 56-4-360. If the driver or the owner of a vehicle of a type
subject to registration under the laws of this State, involved in an
accident within this State, has no license or registration in this State, the
driver is not allowed a license nor is an owner allowed to register any
vehicle in this State until he has complied with the requirements of this
article to the same extent that would be necessary if at the time of the
accident he had held a license or been the owner of a vehicle registered
in this State.
Section 56-4-370. When a nonresident's operating privilege is
suspended pursuant to Sections 56-4-320 or 56-4-350, the department
shall transmit a certified copy of the record of the action to the official
in charge of the issuance of licenses and registration certificates in the
state in which the nonresident resides, if the law of the other state
provides for action in relation thereto similar to that provided for under
the laws of this State.
Section 56-4-380. Upon receipt of the certification that the
operating privilege of a resident of this State has been suspended or
revoked in the other state pursuant to a law providing for its suspension
or revocation for failure to deposit security for the payment of judgments
arising out of a motor vehicle accident under circumstances which
would require the department to suspend a nonresident's operating
privilege had the accident occurred in this State, the department shall
suspend the license of the resident if he was the driver and all of his
registrations if he was the owner of a motor vehicle involved in the
accident. This suspension continues until the resident furnishes
evidence of compliance with the law of the other state relating to the
deposit of the security.
Section 56-4-390. The security required under this article must be
in the form and in the amount that the department requires but in no case
in excess of the limits specified in Section 56-4-340 in reference to the
acceptable limits of a policy or bond. The person depositing security
shall specify in writing the person on whose behalf the deposit is made
and, at any time while the deposit is in the custody of the department or
State Treasurer, the person depositing it may, in writing, amend the
specifications of the persons on whose behalf the deposit is made to
include additional persons; but a single deposit of security is applicable
only on behalf of persons required to furnish security because of the
same accident.
Section 56-4-400. The department may at any time reduce the
amount of security ordered in any case if, in its judgment, the amount
ordered is excessive. In case the security originally ordered has been
deposited, the excess deposited over the reduced amount ordered must
be returned to the depositor or his personal representative,
notwithstanding the provisions of Section 56-4-410. In no case may the
department reduce the amount of security to a sum less than two hundred
dollars.
Section 56-4-410. Security deposited in compliance with the
requirements of this article must be placed by the department in the
custody of the State Treasurer and is applicable only to the payment of
judgments rendered against the persons on whose behalf the deposit was
made for damages arising out of the accident in question in an action at
law begun not later than two years after the date of the accident or
within two years after the date of deposit of any security under Section
56-4-350(3), and this deposit or any balance must be returned to the
depositor or his personal representative when evidence satisfactory to
the department has been filed with it that there has been a release from
liability, a final adjudication of nonliability, a warrant for confession of
judgment, or a duly acknowledged agreement, in accordance with
Section 56-4-330(7), or when, after the expiration of two years from the
date of the accident or within two years after the date of deposit of any
security under Section 56-4-350(3), the department is given reasonable
evidence that there is no action pending and no judgment rendered in the
action left unpaid.
Section 56-4-420. When any person whose license would otherwise
have been suspended for failure to deposit security required pursuant to
this article is, or later becomes, an operator in the employ of another
owner, the department may in its discretion, notwithstanding any
provisions in this chapter to the contrary, allow the person to retain his
license to operate a vehicle of another owner, in the pursuit of the
employment, if the employer-owner of the vehicle has furnished proof
of financial responsibility covering the operation of any vehicle which
the person may be permitted to operate. The department shall designate
the restrictions imposed pursuant to this section on that person's license.
Section 56-4-430. Neither the action taken by the department
pursuant to this article, the findings, if any, of the department upon
which action is based, nor the security filed as provided in this article
may be referred to in any way or be any evidence of the negligence or
due care of either party at the trial of any action at law to recover
damages.
Article 7
Proof of Financial Responsibility
for the Future
Section 56-4-510. When any person fails within sixty days to satisfy
any judgment, it is the duty of the clerk of court, or of the judge of a
court which has no clerk, in which any judgment is rendered within this
State to forward to the department immediately after the expiration of
sixty days a certified copy of the judgment.
Section 56-4-520. If the defendant named in any certified copy of
a judgment reported to the department is a nonresident, the department
shall transmit a certified copy of the judgment to the official in charge
of the issuance of licenses and registration certificates of the state of
which the defendant is resident.
Section 56-4-530. The department, upon receipt of a certified copy
of judgment, shall suspend the license and registration and any
nonresident's operating privilege of any person against whom the
judgment was rendered, except as otherwise provided in Sections 56-4-540 to 56-4-560 and 56-4-590.
Section 56-4-540. If the judgment creditor consents in writing, in
the form which the department may prescribe, that the judgment debtor
is allowed license and registration or nonresident's operating privilege,
this may be allowed by the department for six months from the date of
the consent and thereafter until the consent is revoked in writing,
notwithstanding default in the payment of the judgment or any
installment thereof prescribed in Section 56-4-590 if the judgment
debtor furnishes proof of financial responsibility.
Section 56-4-550. A person whose license, registration, or
nonresident's operating privilege has been suspended or is about to be
suspended or becomes subject to suspension under the provisions of this
article may be relieved from the effect of the judgment as prescribed in
this article by filing with the department an affidavit stating that at the
time of the accident upon which the judgment has been rendered the
affiant was insured, that the insurer is liable to pay the judgment, and the
reason, if known, why the insurance company has not paid the judgment.
He shall also file the original policy of insurance or a certified copy
thereof, if available, and other documents which the department may
require to show that the loss, injury, or damage for which the judgment
was rendered was covered by the policy of insurance. If the department
is satisfied from these papers that the insurer was authorized to issue the
policy of insurance at the time and place of issuing the policy and that
the insurer is liable to pay the judgment, at least to the extent and for the
amounts required in this chapter, the department shall not suspend the
license or registration or nonresident's operating privilege or, if already
suspended, shall reinstate them.
Section 56-4-560. Whenever a person whose license would
otherwise have been suspended for failure to satisfy a judgment as
provided in Section 56-4-530 is, or later becomes, an operator in the
employ of another owner, the department may, in its discretion,
notwithstanding any provisions in this chapter to the contrary, allow the
person to retain his license to operate a vehicle of another owner in the
pursuit of the employment, if the employer-owner of the vehicle has
furnished proof of financial responsibility covering the operation of any
vehicle which the person may be permitted to operate. The department
shall designate the restrictions imposed pursuant to this section on that
person's license.
Section 56-4-570. The license, registration, and nonresident's
operating privilege, except as otherwise provided in Section 56-4-560,
shall remain suspended and may not be renewed nor may any license or
registration be thereafter issued in the name of that person, including
that person if not previously licensed until every judgment is satisfied in
full or to the extent provided in Section 56-4-580 and until the person
gives proof of financial responsibility, subject to the exemptions stated
in Sections 56-4-540 to 56-4-560 and 56-4-590.
A discharge in bankruptcy following the rendering of any judgment
does not relieve the judgment debtor from any of the requirements of
this article.
Section 56-4-580. Judgments referred to in this article, for the
purpose of this article only, must be considered satisfied:
(1) when fifteen thousand dollars has been credited upon any
judgment rendered in excess of that amount because of bodily injury to
or death of one person as the result of any one accident;
(2) when, subject to the limit of fifteen thousand dollars because of
bodily injury to or death of one person, the sum of thirty thousand
dollars has been credited upon any judgments rendered in excess of that
amount because of bodily injury to or death of two or more persons as
the result of any one accident; or
(3) when five thousand dollars has been credited upon any
judgments rendered in excess of that amount because of injury to or
destruction of property of others as a result of any one accident.
Payments made in settlement of any claims because of bodily injury,
death, or property damage arising from a motor vehicle accident must be
credited in reduction of the amounts provided for in this section.
Section 56-4-590. A judgment debtor upon due notice to the
judgment creditor may apply to the court in which the judgment was
rendered for the privilege of paying the judgment in installments, and
the court, in its discretion and without prejudice to any other legal
remedies which the judgment creditor may have, may order and fix the
amounts and times of payment of the installments.
The department may not suspend a license, registration, or
nonresident's operating privilege and shall restore any license,
registration, or nonresident's operating privilege suspended following
nonpayment of a judgment when the judgment debtor gives proof of
financial responsibility and obtains an order permitting the payment of
the judgment in installments and while the payment of any installment
is not in default.
If the judgment debtor fails to pay any installment as specified by the
order, then upon notice of the default the department shall suspend the
license, registration, or nonresident's operating privilege of the judgment
debtor until the judgment is satisfied, as provided in this article.
Section 56-4-600. When the department, under any law of this
State, suspends or revokes the license of a person upon receiving a
record of conviction or forfeiture of bail and in all cases where the
department suspends or revokes the driver's license of a person under
lawful authority possessed by the department, the department shall also
suspend the registration for all motor vehicles registered in the name of
that person, except that it shall not suspend the registration, unless
otherwise required by law, if that person has previously given or shall
immediately give and thereafter maintain proof of financial
responsibility with respect to all motor vehicles registered by him. The
license and registration remain suspended or revoked and may not at any
time thereafter be renewed nor may any license be thereafter issued to
that person nor may any motor vehicle be thereafter registered in the
name of that person until permitted under the motor vehicle laws of this
State and not then until he gives and thereafter maintains proof of
financial responsibility.
Section 56-4-610. When the department suspends or revokes a
nonresident's operating privilege by reason of a conviction or forfeiture
of bail, this privilege remains suspended or revoked unless that person
has previously given or immediately gives and thereafter maintains
proof of financial responsibility.
Section 56-4-620. If a person is not licensed but by final order or
judgment is convicted of any offense requiring the suspension or
revocation of license, for operating a motor vehicle upon the highways
without being licensed to do so, or for operating an unregistered motor
vehicle upon the highways, no license may thereafter be issued to that
person and no motor vehicle may continue to be registered or thereafter
be registered in his name until he gives and thereafter maintains proof
of financial responsibility.
Section 56-4-630. Proof of financial responsibility when required
under this chapter may be given by filing:
(1) a certificate of insurance as provided in Sections 56-4-640 or 56-4-650;
(2) a bond as provided in Section 56-4-660; or
(3) a certificate of deposit of money or securities as provided in
Section 56-4-670.
Section 56-4-640. Proof of financial responsibility may be furnished
by filing with the department the written certificate of any insurer
authorized to do business in this State certifying that there is in effect a
motor vehicle liability policy for the benefit of the person required to
furnish proof of financial responsibility. The certificate must give the
date of the motor vehicle liability policy, which date must be the same
as the effective date of the certificate, and must designate by explicit
description or by appropriate reference all motor vehicles covered,
unless the policy is issued to a person who is not the owner of a motor
vehicle. The policy must be written for a minimum term of one year.
A certificate of insurance remains in full force and effect for at least
ninety days unless the certificate is canceled by the insurance company
for some reason other than nonpayment of premium. If a certificate of
insurance is canceled after ninety days for nonpayment of premium, the
insurance company issuing the certificate shall immediately notify the
department that the reason for the cancellation is for nonpayment of
premium. If a certificate of insurance is canceled for any reason other
than for nonpayment of premium the insurance company issuing the
certificate shall immediately notify the department that the cancellation
is not for nonpayment of premium. The department may refuse
acceptance of the certificate of insurance required under this section for
the following reasons:
(1) if the certificate is filed by an agent or company found to be in
violation of any of the provisions of this chapter; or
(2) if the certificate is filed for any person who has previously had
a certificate canceled for nonpayment of premium, unless the policy
when the certificate is issued is certified to be noncancelable for one
year for nonpayment of premium.
No motor vehicle may be or continue to be registered in the name of
any person required to file proof of financial responsibility unless the
motor vehicle is so designated in the certificate.
Section 56-4-650. The nonresident owner of a motor vehicle not
registered in this State may give proof of financial responsibility by
filing with the department written certificates of an insurer authorized to
transact business in the state in which the motor vehicle, or motor
vehicles, described in the certificate is registered or, if the nonresident
does not own a motor vehicle, then in the state in which the insured
resides, as long as the certificate otherwise conforms with the provisions
of this chapter, and the department shall accept it upon condition that the
insurance carrier complies with the following provisions with respect to
the policies certified:
(1) the insurance carrier executes a power of attorney authorizing
the department to accept service on its behalf of notice or process in any
action arising out of a motor vehicle accident in this State; and
(2) the insurance carrier agrees in writing that the policies must be
construed to conform with the laws of this State relating to the terms of
motor vehicle liability policies issued in this State.
If an insurer not authorized to transact business in this State, which
has qualified to furnish proof of financial responsibility, defaults in any
of these undertakings or agreements, the department may not thereafter
accept as proof any certificate of that carrier whether formerly filed or
thereafter tendered as proof, so long as the default continues.
Section 56-4-660. Proof of financial responsibility may be
evidenced by the bond of a surety company authorized to transact
business within this State or a bond with at least two individual sureties,
each owning real estate in this State and together having equities equal
in value to at least twice the amount of the bond, which real estate must
be scheduled in the bond approved by a judge of a court of record,
which bond must be conditioned for payment of the amounts specified
in Section 56-4-20(13). The bond must be filed with the department and
is not cancelable except after ten days' written notice to the department.
The bond constitutes a lien in favor of the State upon the real estate
scheduled of any surety. The lien exists in favor of any holder of a final
judgment against the person who has filed the bond for damages,
including damages for care and loss of services, because of bodily injury
to or death of any person or for damage because of injury to or
destruction of property, including the loss of use thereof, resulting from
the ownership, maintenance, use, or operation of a motor vehicle after
the bond was filed, upon the filing of notice to that effect by the
department in the appropriate office of the county or city where the real
estate is located. Any surety scheduling real estate security shall furnish
satisfactory evidence of title and the nature and extent of all
encumbrances thereon and the value of the surety's interest therein in the
manner which the judge of the court of record may require. The notice
filed by the department, in addition to other matters which are
considered to be pertinent by the department, must contain a legal
description of the real estate scheduled, the name of the holder of the
record title, the amount for which it stands as security, and the name of
the person in whose behalf proof is being made. Upon the filing of the
notice, the clerk of court shall retain it as part of the records of the court
and enter upon the record the date and hour of filing, the name of the
surety, the name of the titleholder of record, the description of the real
estate and a notation that a lien is charged on the real estate pursuant to
the notice filed under this section.
If a judgment rendered against the principal on the bond is not
satisfied within sixty days after it has become final, the judgment
creditor may for his own use and benefit and at his sole expense bring
an action in the name of the State against the company or persons
executing the bond, including an action or proceeding to foreclose any
lien that may exist upon the real estate of a person who executed the
bond. An action to foreclose any lien upon real estate scheduled by any
surety under the provisions of this section may be brought in the same
manner as is provided for the foreclosure of real estate mortgages in this
State.
Section 56-4-670. Proof of financial responsibility may be
evidenced by the certificate of the State Treasurer that the person named
therein has deposited with him forty-five thousand dollars in cash or
securities such as may legally be purchased by savings banks or for trust
funds of a market value of forty-five thousand dollars. The State
Treasurer may not accept the deposit and issue a certificate therefor and
the department may not accept the certificate unless accompanied by
evidence that there are no unsatisfied judgments of any character against
the depositor in the county where the depositor resides.
The deposit must be held by the State Treasurer to satisfy, in
accordance with the provisions of this chapter, any execution on a
judgment issued against the person making the deposit for damages,
including damage for care and loss of service, because of bodily injury
to or death of any person or for damages because of injury to or
destruction of property, including the loss of use thereof, resulting from
the ownership, maintenance, use, or operation of a motor vehicle after
the deposit was made. Money or securities deposited are not subject to
attachment or execution unless the attachment or execution arises out of
a suit for damages which this chapter covers.
Section 56-4-680. When a person required to give proof of financial
responsibility under this chapter is, or later becomes, an operator in the
employ of any owner or is, or later becomes, a member of the immediate
family or household of the owner, the department shall accept proof
given by the owner in lieu of proof by the other person to permit that
person to operate a motor vehicle for which the owner has given proof
as provided in this chapter. The department shall designate the
restrictions imposed by this section on that person's license.
Section 56-4-690. The department shall consent to the cancellation
of any bond or certificate of insurance or the department shall direct and
the State Treasurer shall return the money or securities to the person
entitled thereto upon the substitution and acceptance of other adequate
proof of financial responsibility pursuant to this chapter.
Section 56-4-700. Whenever any proof of financial responsibility
filed under the provisions of this chapter no longer fulfills the purposes
for which required, the department shall require other proof as required
by this chapter and shall suspend the license and registration or the
nonresident's operating privilege pending the filing of other proof.
Section 56-4-710. The department, upon request, shall consent to
the immediate cancellation of any bond or certificate of insurance, or
shall return to the person entitled thereto any money or securities
deposited pursuant to this chapter as proof of financial responsibility, or
the department shall waive the requirement of filing proof, if:
(1) at any time after five years from the date the proof was required
when, during the five-year period preceding the request, the department
has not received record of a conviction or a forfeiture of bail which
would require or permit the suspension or revocation of the license,
registration, or nonresident's operating privilege of the person by or for
whom the proof was furnished;
(2) in the event of the death of the person on whose behalf the proof
was filed or the permanent incapacity of the person to operate a motor
vehicle; or
(3) if the person who has given proof surrenders his license and
registration to the department.
The department may not consent to the cancellation of any bond or
the return of any money or securities if any action for damages upon a
liability covered by the proof is then pending or any judgment upon this
liability is then unsatisfied or if the person who has filed the bond or
deposited the money or securities has, within one year immediately
preceding the request, been involved as an operator or owner in any
motor vehicle accident resulting in injury or damage to the person or
property of others. An affidavit of the applicant as to the nonexistence
of these facts or that he has been released from all liability or has been
finally adjudicated not to be liable for the injury or damage is sufficient
evidence thereof in the absence of evidence to the contrary in the records
of the department.
Section 56-4-720. When a person whose proof has been canceled
or returned under Section 56-4-710(3) applies for a license or
registration within five years from the date proof was originally
required, this application must be refused unless the applicant
reestablishes the proof for the remainder of the five-year period.
Article 9
Motor Vehicle Liability Policies
Section 56-4-810. As used in this article:
(1) `Bodily injury' also includes death resulting from an injury to the
body;
(2) `Insured', as used in Sections 56-4-850, 56-4-860, 56-4-880, and
56-4-890, means the named insured and, while resident of the same
household, the spouse of the named insured and relatives of either, while
in a motor vehicle or otherwise, and a person who uses, with the
consent, expressed or implied, of the named insured, the motor vehicle
to which the policy applies and a guest in the motor vehicle to which the
policy applies or the personal representative of any of the above;
(3) `Uninsured motor vehicle' is a motor vehicle as to which there
is no bodily injury liability insurance and property damage liability
insurance, both in the amounts specified in Section 56-4-830, or there is
the insurance but the insurance company writing it denies coverage
thereunder and there is no bond or deposit of cash or securities in lieu of
the bodily injury and property damage liability insurance. A motor
vehicle is `uninsured' if the owner or operator is unknown.
Section 56-4-820. An owner's policy of liability insurance must
designate by explicit description or by appropriate reference all motor
vehicles with respect to which coverage is granted.
Section 56-4-830. No policy or contract of bodily injury liability
insurance or of property damage liability insurance covering liability
arising from the ownership, maintenance, or use of any motor vehicle
may be issued or delivered in this State to the owner of the vehicle, or
may be issued or delivered by any insurer licensed in this State upon any
motor vehicle then principally garaged or principally used in this State,
unless it contains a provision insuring the person named therein and any
other person, as insured, using any of those motor vehicles with the
express or implied permission of the named insured, against loss from
the liability imposed by law for damages arising out of the ownership,
maintenance, or use of the motor vehicles within the United States or
Canada, subject to limits exclusive of interest and costs, with respect to
each motor vehicle, as follows: Fifteen thousand dollars because of
bodily injury to or death of one person in any one accident, and, subject
to that limit for one person, thirty thousand dollars because of bodily
injury to or death of two or more persons in any one accident and five
thousand dollars because of injury to or destruction of property of others
in any one accident.
Section 56-4-840. No policy or contract may be issued or delivered
as described in Section 56-4-850 unless it contains an endorsement or
provisions undertaking to pay the insured all sums which he is legally
entitled to recover as damages from the owner or operator of an
uninsured motor vehicle within limits which may be no less than the
requirements of Section 56-4-830. The endorsement or provisions must
also provide for not less than five thousand dollars coverage for injury
to or destruction of the property of the insured in any one accident but
may provide an exclusion of the first two hundred dollars of the loss or
damage. No additional charge may be made to the policyholder for the
endorsement. Recovery under the endorsement or provisions is subject
to the conditions set forth in Sections 56-4-850 to 56-4-880.
Section 56-4-850. If the owner or operator of any motor vehicle
which causes bodily injury or property damage to the insured is
unknown, the insured or someone on his behalf, in order for the insured
to recover under the endorsement, shall report the accident as required
by Sections 56-5-1260 to 56-5-1280.
Section 56-4-860. If the owner or operator of any vehicle causing
injury or damages is unknown, an action may be instituted against the
unknown defendant as `John Doe' and service of process may be made
by delivery of a copy of the motion for judgment or other pleadings to
the clerk of the court in which the action is brought and service upon the
insurance company issuing the policy must be made as prescribed by
law as though the insurance company were a party defendant. The
insurance company may file pleadings and take other action allowable
by law, in the name of `John Doe'.
Section 56-4-870. An insurer paying a claim under the endorsement
or provisions required by Section 56-4-840 is subrogated to the rights of
the insured to whom the claim was paid against the person causing the
injury, death, or damage to the extent that payment was made, but the
bringing of an action against the unknown owner or operator as `John
Doe' or the conclusion of this action does not constitute a bar to the
insured, if the identity of the owner or operator who caused the injury or
damages complained of becomes known, from bringing an action against
the owner or operator theretofore proceeded against as `John Doe', and
any recovery against that owner or operator must be paid to the insurer
to the extent that the insurer paid the named insured in the action
brought against the owner or operator as `John Doe', except that the
insurer shall pay its proportionate part of any reasonable costs and
expenses incurred in connection therewith, including reasonable
attorneys' fees. Nothing in an endorsement or provisions made under
Section 56-4-840 nor any other provisions of law operate to prevent the
joining in an action against `John Doe' of the owner or operator of the
motor vehicle causing injury as a party defendant and this joinder is
specifically authorized.
Section 56-4-880. No endorsement or provisions required by
Section 56-4-840 may contain any provision requiring arbitration of any
claim arising under the endorsement or provisions; nor may anything be
required of the insured except the establishment of legal liability; nor is
the insured restricted or prevented in any manner from employing legal
counsel or instituting legal proceedings.
Section 56-4-890. The motor vehicle liability policy must state the
name and address of the named insured, the coverage afforded by the
policy, the premium charged for the policy, the policy period, and the
limits of liability and shall contain an agreement, or must be endorsed,
that insurance is provided under the policy in accordance with the
coverage defined in this chapter as respects bodily injury and death or
property damage, or both, and is subject to all of the provisions of this
chapter.
Section 56-4-900. Every motor vehicle liability policy is subject to
the following provisions, which need not be contained in the policy:
(1) The liability of the insurer with respect to the insurance required
by this chapter becomes absolute whenever injury or damage covered by
the motor vehicle liability policy occurs.
(2) The policy may not be canceled or annulled as to the liability by
any agreement between the insurer and the insured after the occurrence
of the injury or damage.
(3) No statement made by the insured or on his behalf and no
violation of the policy defeats or voids the policy.
(4) The satisfaction by the insured of a judgment for the injury or
damage is not a condition precedent to the right or duty of the insurer to
make payment on account of the injury or damage.
(5) The insurer has the right to settle any claim covered by the
policy, and, if the settlement is made in good faith, the amount of the
settlement is deductible from the limits of liability specified in Section
56-4-830.
(6) The policy, the written application therefor, if any, and any rider
or endorsement which does not conflict with the provisions of this
chapter constitute the entire contract between the parties.
Section 56-4-910. The motor vehicle liability policy need not insure
any liability under the Workers' Compensation Law nor any liability on
account of bodily injury to or death of an employee of the insured while
engaged in the employment, other than domestic, of the insured or while
engaged in the operation, maintenance, or repair of the motor vehicle nor
any liability for damage to property owned by, rented to, in charge of,
or transported by the insured.
Section 56-4-920. Any policy which grants the coverage required
for a motor vehicle liability policy may also grant any lawful coverage
in excess of or in addition to the coverage specified for a motor vehicle
liability policy, and the excess or additional coverage is not subject to
the provisions of this chapter. With respect to a policy which grants this
excess or additional coverage the term `motor vehicle liability policy'
applies only to that part of the coverage which is required by this article.
Section 56-4-930. Any motor vehicle liability policy may provide:
(1) that the insured shall reimburse the insurer for any payment the
insurer would not have been obligated to make under the terms of the
policy except for the provisions of this chapter; and
(2) for the prorating of the insurance under the policy with other
valid and collectible insurance.
Section 56-4-940. The requirements for a motor vehicle liability
policy may be fulfilled by the policies of one or more insurers, which
policies together meet the requirements.
Section 56-4-950. Any binder issued pending the issuance of a
motor vehicle liability policy must be considered as fulfilling the
requirements for the policy.
Section 56-4-960. When an insurer has certified a motor vehicle
liability policy under Section 56-4-640 and 56-4-650, the insurance so
certified may not be canceled or terminated until at least ten days after
a notice of cancellation or termination of the insurance certified is filed
with the department, except that a policy subsequently procured and
certified, on the effective date of its certification, terminates the
insurance previously certified with respect to any motor vehicle
designated in both certificates.
Section 56-4-970. This chapter does not apply to or affect policies
of automobile insurance against liability which may be required by any
other law of this State, and those policies, if they contain an agreement
or are endorsed to conform with the requirements of this chapter, may
be certified as proof of financial responsibility under this chapter.
Section 56-4-980. This chapter does not apply to or affect policies
insuring solely the insured named in the policy against liability resulting
from the maintenance or use by the persons in the insured's employ or
on his behalf of motor vehicles not owned by the insured.
Article 11
Associated Automobile Insurers
of South Carolina
Section 56-4-1110. As used in this article:
A. `Insurable applicant' means a person who:
(1) (a) is a resident of this State and owns a motor vehicle
registered in this State, and
(i) has a valid driver's license, and
(ii) pays the required premium, or
(b) owns a motor vehicle registered in this State and does not
operate the vehicle, and pays the required premium, or
(c) is a nonresident of this State and owns an automobile
registered or principally garaged in this State and pays the required
premium.
(2) named in (1)(a), (b), and (c) above does not qualify as
insurable applicants if:
(a) a person who usually drives the motor vehicle does not hold
or is not eligible to obtain a driver's license or has a driver's license
which is under suspension; or
(b) the person has any unpaid premiums with respect to prior
automobile insurance, unless the person has paid the full term premium
for coverage at the time coverage is to commence.
B. `Subscriber' means an insurer who is required by the
provisions of this article to subscribe to and participate in the AAI.
C. `Commissioner' means the Chief Insurance Commissioner.
D. `Eligible vehicle' means a nonfleet, four-wheel vehicle, not
used as a public or livery conveyance, of the private passenger or station
wagon type, or a vehicle with load capacity of fifteen hundred pounds
or less, or any farm vehicle individually owned and licensed.
E. `All other vehicles' means:
(1) garage risks including nonmotor vehicle insurance when
written in combination with automobile liability coverage;
(2) ambulance risks;
(3) commercial risks which have a load capacity less than ten
thousand pounds and are not required to have a mandatory filing by a
governmental authority other than an SR-22. Pulpwood trucks or
dumptrucks are not included under `all other vehicles', regardless of load
capacity;
(4) church buses used by a church to transport adults or
children to and from services and in activities incidental to church
functions; however, a mandatory filing by any governmental authority
other than an SR-22 is not required;
(5) privately-owned school buses used to transport school
children and students, their parents or guardians, members of the faculty,
school board members, nurses, doctors, and dentists, as well as guests
in connection with any school activity and operations incidental thereto,
including games, outings, and similar road trips; however, a mandatory
filing by any governmental authority other than an SR-22 is not
required;
(6) buses used by nonprofit organizations which are sponsored
in whole or in part by state, federal or local funds and used to transport
children or adults in connection with activities or services provided by
the nonprofit organizations; however, a mandatory filing by any
governmental authority other than an SR-22 is not required.
F. `Participation ratio' means the ratio of the subscriber's premiums
or exposure units in the State to the comparable statewide totals for all
subscribers. For eligible vehicle insurance the participation ratio must
be based upon the net direct automobile insurance car years written in
the State for the latest twelve-month period as reported to the statistical
agent of each subscriber as eligible vehicle exposures.
For all other automobile insurance, including insurance for fleets,
commercial vehicles, and public vehicles, the ratio must be based upon
the total automobile liability gross direct premiums written in the State,
including policy and membership fees, less dividends paid, less return
premiums and premiums on policies not taken, without including
reinsurance assumed and without deducting reinsurance ceded, reduced
by the amount of these premiums reported as private passenger
automobiles nonfleet premiums for the calendar year ending December
thirty-first of the second prior year.
Section 56-4-1120. There is created an unincorporated, nonprofit,
independent, legal entity to be known as the Associated Automobile
Insurers of South Carolina (AAI). Every insurer authorized to write and
writing automobile insurance in this State shall become a member of the
AAI.
Section 56-4-1130. The AAI shall provide, but may contract with one
or more insurers licensed to do automobile insurance business in South
Carolina, for the issuance and servicing of automobile insurance policies
which are noncancelable and guaranteed renewable so long as the
insured remains an insurable applicant, which policies must afford:
A. Automobile liability insurance in the minimum amounts as
required under the laws of this State but not to exceed limits equivalent
to one hundred thousand dollars a person, three hundred thousand
dollars an accident and property damage liability not to exceed twenty-five thousand dollars an accident, and any other coverages required by
law or required to be offered by insurers by law.
B. With respect to an eligible vehicle, at the option of the insured,
the following:
(1) supplemental first party economic benefits in amounts not
exceeding the limits filed for the coverage by AAI, and
(2) automobile physical damage insurance, subject to a deductible
of not less than two hundred dollars for each loss under collision
coverage, so long as the insurable applicant purchases the coverage
specified in Section 56-4-1130. The insured may, at his option,
purchase coverage with a deductible of one hundred dollars for an
additional premium.
Section 56-4-1140. The AAI, with respect to an eligible vehicle and
all other vehicles, shall also provide an optional deferred premium
payment plan which includes reasonable installment charges. In the
alternative an insurable applicant may utilize the services of a licensed
premium finance company.
Section 56-4-1150. Every agent who is authorized to solicit,
negotiate, or bind automobile insurance on behalf of any subscriber, and
every agent designated by the commissioner pursuant to the laws of this
State, is authorized to solicit, negotiate, or bind automobile insurance on
behalf of the AAI in accordance with the plan of operation. Every agent,
with respect to eligible vehicles and all other vehicles:
A. shall offer to place insurance through the AAI for any insurable
applicant and bind coverage if the insurable applicant accepts this offer;
B. is entitled to receive, and any subscriber is required to pay, a
commission for placing the insurance through the AAI. For one year
following the effective date of this article each agent shall receive as a
commission a fee of thirty dollars plus the sum of five percent of the
policy premium in excess of three hundred dollars. Thereafter, the rate
of commission must be as established by the plan of operation not to
exceed a sum in excess of ten percent of the policy premium. AAI
business must be excluded from an insurer's performance/incentive plans
for its agents.
Section 56-4-1160. Any insured who, at the time of issuance of a
policy providing coverage through the AAI, has an accident and
violation-free driving record, is entitled to a policy written by any
subscriber if that insured provides an official motor vehicle report which
reflects an accident and violation-free driving record for not less than
twenty-four consecutive months following the date of issuance of the
policy. The term `insured' as used in this section includes the insured
named in the policy and all regular operators covered by the policy. The
initial board of directors for the AAI shall incorporate in the plan of
operation a requirement that all persons insured through the AAI must
be given notice of this right annually.
Section 56-4-1170. A. Every agent authorized to place business
through the AAI, as a condition of that authority, shall advise the
applicant of benefits of possible lower rates afforded by other insurers
represented by the agent, if any. In addition, the AAI shall notify, at
least annually, in writing each person insured through the AAI of
benefits of possible lower rates afforded by the normal markets of each
subscriber.
B. Every agent authorized to place business through the AAI, as a
condition of that authority, shall advise an applicant of the possible
benefits of a lower rate, if available, offered through the AAI.
C. The initial board of directors for the AAI shall incorporate in the
plan of operation regulations necessary for the administration of this
article.
Section 56-4-1180. A. No insurer may refuse to issue or renew a
policy of private passenger automobile insurance solely because of age,
sex, residence, or marital status of the person seeking coverage. Nor
may any insurer refuse to issue or renew a policy of private passenger
automobile insurance for any reason due, directly or indirectly, to the
race, color, creed, financial status, national origin, or ancestry of the
person seeking coverage or solely because another insurer has refused
to write or renew a policy in which that person was the name insured.
However, rates, rating systems, territories, and classification plans
lawfully in use on or after the effective date of this article may be used
notwithstanding any other provision of this article.
B. Every insurer, at the written request of any person refused a new
or renewed policy, shall specify in writing the reason relied upon by the
insurer in refusing to issue or renew a policy of insurance. This
response must be made to the person not later than thirty days after
receipt of the request.
C. Following the response and upon written application made by
the person not later than fifteen days following receipt of the response,
the commissioner shall review the facts submitted by the insurer and by
the complaining party, make a determination as to whether the
provisions of this section have been violated, and advise the parties in
writing of his decisions.
D. If the commissioner determines that the person was denied
coverage in violation of this article, the person is entitled to coverage
written by the insurer wrongfully denying the coverage upon payment
of the required premium. If the person was insured through the AAI
pending a resolution of the validity of the insurer's decision not to issue
or renew coverage, he is entitled to a refund by the insurer of the
difference, if any, between the premium paid for coverage through the
AAI and the premium he would have paid for coverage written by the
insurer during that period. If the commissioner determines that the
violation was wilful, he may impose a penalty upon the insurer of not
more than one thousand dollars.
E. There is no liability on the part of, and no cause of action of any
nature may arise against, any insurer or the commissioner or any of their
authorized representatives, agents, or employees for furnishing
information in compliance with this article or for the making of any
statement pertaining thereto, unless the person asserting the cause of
action was motivated by express malice or gross negligence.
F. An order of the commissioner issued pursuant to this section is
subject to appeal in accordance with the pertinent provisions of Title 38.
Section 56-4-1190. A. The rates, classifications, rating plans, and
rating regulations applicable to the insurance written by the AAI are
those filed by the AAI and approved by the commissioner. The rates
charged by the AAI are those rates approved by the commissioner in
accordance with the provisions of Title 38. The rates may not include
a margin for profit, and the expense portion thereof must be reduced by
the projected investment income realized on premium and loss reserves.
The AAI statewide average rate level before surcharges for all territories
and classes combined for the first twenty-four months following the
effective date of the article may not be more than ten percent in excess
of the comparable statewide average rate level before surcharges for
voluntary and involuntary business combined as projected by the rate
service organization having the largest number of members and
subscribers in South Carolina. This cap applies separately for each
coverage for which rates are calculated.
B. Every individual rate is subject to any safe driver discount or
surcharge provided for in any merit rating plan promulgated by the
commissioner.
Section 56-4-1200. A. If at any time under acceptable accounting
and actuarial methods the AAI is producing a profit, the AAI, by action
of the board of directors approved by the commissioner, shall make
refunds to policyholders or reduce rates.
B. If any at time under acceptable accounting methods and actuarial
methods the AAI shows an operating loss, all subscribers of the AAI
shall participate in assessments for the operating loss of the AAI in the
proportion as defined in Part F of Section 56-4-1110.
C. Neither the assets nor the surplus of a subscribing insurer may
be used to finance the operating deficits of the AAI. Assessments for
losses of the AAI must be recouped annually by each subscriber and by
the AAI by a specific surcharge to be levied upon all policyholders of
each subscriber and the policyholders of the AAI. These assessments
must be at a percentage adopted by the board of directors and approved
by the commissioner. If the amount collected by insurers during the
period of surcharge exceeds assessments paid by the subscriber to the
AAI, the subscriber shall pay over the excess to the AAI at a date
specified by the AAI. If the amount collected during the period of
assessments is less than the assessments paid to the AAI by the
subscribers, the AAI shall refund the differences. The amount of the
recoupment may not be considered premium income subject to state
premium tax.
D. The amounts of the recoupments surcharge by each insurer must
be filed with the commissioner and made a matter of public record
available to anyone.
E. The AAI is exempt from:
(1) Section 38-9-80; and
(2) Chapter 31 of Title 38.
Section 56-4-1210. The AAI shall file in the office of the
commissioner on or before March thirty-first of each year a statement
which summarizes the transactions, conditions, operations, and affairs
of the AAI during the preceding fiscal year ending December thirty-first.
The statement must contain matters and information prescribed by the
commissioner and be in the form required by the commissioner. The
commissioner may at any time require the AAI to furnish to him
additional information with respect to its transactions regarding any
other matter which the commissioner considers to be material to assist
him in evaluating the operation and experience of the AAI.
Section 56-4-1220. The commissioner may from time to time make
an examination into the affairs of the AAI and, in undertaking this
examination, may hold a public hearing. The expense of the
examination must be paid by the AAI.
Section 56-4-1230. The provisions of this section are known as the
`plan of operation' and include the following requirements:
A. Insurers required to subscribe to and participate in the AAI,
acting through the initial board of directors, shall adopt a plan of
operation in accordance with the requirements of this article and file it
with the commissioner for his approval within ninety days after the
effective date of this article.
B. The plan of operation, unless sooner approved in writing, must
be considered as meeting the requirements of this article if it is not
disapproved by the commissioner within sixty days from the date of
filing. Before the disapproval of any such plan of operations, the
commissioner shall issue a notice stating in what respect the plan of
operation fails to meet the requirements of this article and fix a date for
hearing. All insurers required to subscribe to and participate in the AAI
and any other party having a direct interest in it shall have an
opportunity to appear in person and by counsel.
C. If no plan of operation is submitted to the commissioner within
ninety days from the effective date of this article, the commissioner shall
prepare and promulgate a plan of operation in accordance with the
requirements of this article which must continue in force until
superseded by a plan of operation effective in accordance with the
provisions of Parts A and B of this section.
D. On the date the plan of operation becomes effective, the South
Carolina Reinsurance Facility shall cease to accept cessions, remaining
in existence solely for the purpose of servicing the `run off' of `in force'
business.
E. Any amendments to the plan of operation are subject to approval
or disapproval of the commissioner as provided in Parts A and B of this
section with respect to the initial plan of operation and become effective
when adopted by a two-thirds vote of the board of directors of the AAI
and upon approval by the commissioner.
Section 56-4-1240. A. Within sixty days after the effective date of
this article, the commissioner shall call the first or organizational
meeting of the AAI and seat a board of directors. The responsibility of
the board includes, but is not limited to, being certain that:
(1) Consumers' interests are protected by:
(a) fair and timely claims handling consistent with provisions
of law and policy coverage and the facts of the claim;
(b) fair underwriting and fair pricing according to the
provisions of this article;
(c) information availability about AAI coverages and rates;
(d) efficient and low cost operations of the AAI, utilizing
automation wherever advantageous and consistent with the objectives
of this article.
(2) Subscribers' interests are protected by:
(a) AAI operations on a nonprofit/nonloss basis;
(b) AAI rates which are adequate but not excessive at the
break-even operating results level.
(c) AAI operations, including claims-cost monitoring, which
are exemplary and representative of the highest performance standards.
B. The initial board consists of fifteen members selected as follows:
(1) two members must be individual public representatives
appointed by the Governor, who shall also appoint alternates for each if
they cannot serve;
(2) one member must be an individual public representative
appointed by the Chairman of the Senate Banking and Insurance
Committee, who shall also appoint an alternate if he cannot serve;
(3) one member must be an individual public representative
appointed by the Chairman of the Labor, Commerce and Industry
Committee of the House of Representatives, who shall also appoint an
alternate if he cannot serve;
(4) one member must be an agent who is a member of, and who
is selected by, the Independent Insurance Agents of South Carolina;
(5) one member must be an agent who is a member of, and who
is selected by, the Carolina Association of Professional Insurance
Agents;
(6) two members must be insurers who are members of, and who
are selected by, the American Insurance Association;
(7) two members must be insurers who are members of, and who
are selected by, the American Mutual Insurance Alliance;
(8) two members must be insurers who are members of, and who
are selected by, the National Association of Independent Insurers;
(9) one member must be a domestic insurer who is not affiliated
with any of the foregoing organizations and who is elected by the
nonaffiliated domestic insurers voting in person or by proxy;
(10) two members must be insurers who are not affiliated with any
of the foregoing organizations, one of whom must be a stock insurer and
one of whom must be a nonstock insurer, and both of whom are
respectively elected by nonaffiliated stock and nonaffiliated nonstock
insurers voting in person or by proxy.
Each insurer representative must be represented by an individual
officer or employee. Voting for the two unaffiliated representatives and
the one domestic representative must be cumulative voting, weighted on
the basis of the latest available automobile insurance premium volume
in the State and may be by proxy. Any insurers group who is under
substantially the same ownership or management must, for voting
purposes, be considered to be one member, the character of its group
affiliations to be determined by that of the individual member with the
largest automobile insurance volume in the State.
A chairman must be selected immediately by the board of directors
from the insurer representatives on the board. The initial board of
directors shall prepare and submit a plan of operation and shall serve for
one year after the effective date of this article.
The plan must provide for the same composition, selection, and voting
rights of the permanent board of directors, who must be selected
annually and shall serve for one year following the date of their
selection. Members of the board of directors present in person or by
proxy and representing fifty-one percent or more of the members
constitute a quorum at any meeting. When a quorum is present a
proposition must be carried by two-thirds of the votes cast in person or
by proxy."
SECTION 3. Articles 1, 3, and 5 of Chapter 77, Title 38 of the 1976
Code and Chapters 9 and 10, Title 56 of the 1976 Code are repealed,
except that the provisions of those articles and chapters continue to
apply until the expiration of automobile insurance policies in effect on
the effective date of this act.
SECTION 4. This act takes effect January 1, 1995.
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