H 3028 Session 112 (1997-1998)
H 3028 General Bill, By Meacham, Gamble, Kelley, Moody-Lawrence, Riser, Simrill,
Stuart and Young-Brickell
A BILL TO AMEND TITLE 38, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO
INSURANCE, BY ADDING CHAPTER 78 SO AS TO ENACT THE "CONSUMER FREEDOM OF CHOICE
IN MOTOR VEHICLE INSURANCE ACT".-SHORT TITLE
12/11/96 House Prefiled
12/11/96 House Referred to Committee on Labor, Commerce and Industry
01/14/97 House Introduced and read first time HJ-18
01/14/97 House Referred to Committee on Labor, Commerce and
Industry HJ-23
A BILL
TO AMEND TITLE 38, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO INSURANCE, BY ADDING
CHAPTER 78 SO AS TO ENACT THE "CONSUMER
FREEDOM OF CHOICE IN MOTOR VEHICLE INSURANCE
ACT"; TO AMEND SECTION 38-77-30, AS AMENDED,
RELATING TO AUTOMOBILE INSURANCE AND
DEFINITIONS, SO AS TO FURTHER DEFINE
"AUTOMOBILE INSURANCE"; TO AMEND
SECTION 38-77-110, AS AMENDED, RELATING TO THE
REQUIREMENT TO WRITE AUTOMOBILE INSURANCE, SO
AS TO ADD A PROVISION THAT NO INSURER IS REQUIRED
TO WRITE PRIVATE PASSENGER AUTOMOBILE INSURANCE
WITH HIGHER LIMITS OF COVERAGE THAN TWO
HUNDRED FIFTY THOUSAND DOLLARS FOR ADDED
PERSONAL PROTECTION COVERAGE AS DEFINED IN
SECTION 38-78-30; TO AMEND THE 1976 CODE BY ADDING
SECTION 38-77-355 SO AS TO ADD PROVISIONS REGARDING
"COLLATERAL SOURCES"; TO AMEND SECTION
38-77-30, AS AMENDED, RELATING TO AUTOMOBILE
INSURANCE AND DEFINITIONS, SO AS TO PROVIDE THAT
"DAMAGES" INCLUDE ACTUAL DAMAGES
ONLY; TO AMEND SECTION 38-77-140, RELATING TO
AUTOMOBILE INSURANCE AND BODILY INJURY AND
PROPERTY DAMAGE LIMITS, SO AS TO PROVIDE, AMONG
OTHER THINGS, THAT AN INSURER SHALL ALSO OFFER
THE INSURED A RIDER OR ENDORSEMENT FOR AN
ADDITIONAL PREMIUM TO COVER LIABILITY FOR
PUNITIVE DAMAGES; TO AMEND SECTION 38-77-150, AS
AMENDED, RELATING TO AUTOMOBILE INSURANCE, THE
UNINSURED MOTORIST PROVISION, AND THE DEFENSE OF
AN ACTION BY THE INSURER, SO AS TO DELETE CERTAIN
LANGUAGE AND PROVISIONS AND PROVIDE, AMONG
OTHER THINGS, THAT INSURERS SHALL OFFER, AT THE
OPTION OF THE INSURED, HIGHER LIMITS OF UNINSURED
MOTORIST COVERAGE IN ACCORDANCE WITH SECTION
38-77-350 AND THAT INSURERS SHALL OFFER ON A FORM
PRESCRIBED BY THE DIRECTOR OF THE DEPARTMENT OF
INSURANCE NONSTACKABLE POLICIES OF UNINSURED
MOTORIST COVERAGE CONTAINING CERTAIN POLICY
PROVISIONS; TO AMEND SECTION 38-77-160, AS AMENDED,
RELATING TO ADDITIONAL UNINSURED MOTORIST
COVERAGE AND TO UNDERINSURED MOTORIST
COVERAGE, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS AND PROVIDE, AMONG OTHER THINGS, THAT
AUTOMOBILE INSURERS SHALL OFFER ON A FORM
PRESCRIBED BY THE DIRECTOR OF THE DEPARTMENT OF
INSURANCE, AT THE OPTION OF THE INSURED, IN
ACCORDANCE WITH SECTION 38-77-350 UNDERINSURED
MOTORIST COVERAGE UP TO THE LIMITS SELECTED FOR
THE INSURED'S LIABILITY COVERAGE TO PROVIDE
COVERAGE IN THE EVENT THE INSURED BECOMES
LEGALLY ENTITLED TO COLLECT DAMAGES FROM THE
OWNER OR OPERATOR OF AN UNDERINSURED MOTOR
VEHICLE AND THAT AN INSURED ENTITLED TO BENEFITS
UNDER AN UNINSURED MOTORIST PROVISION IS NOT
ENTITLED TO BENEFITS UNDER AN UNDERINSURED
MOTORIST PROVISION; TO AMEND SECTION 56-9-350,
RELATING TO THE VERIFICATION OF INSURANCE
COVERAGE FORM TO BE ISSUED FOLLOWING CERTAIN
ACCIDENTS, THE EFFECT OF FAILURE TO RETURN THE
FORM, AND UNINVESTIGATED ACCIDENTS, SO AS TO
DELETE CERTAIN PROVISIONS, AND PROVIDE THAT THE
OPERATOR OR OWNER OF A MOTOR VEHICLE INVOLVED
IN AN ACCIDENT RESULTING IN PROPERTY DAMAGE OF
FOUR HUNDRED DOLLARS OR MORE OR IN BODILY
INJURY OR DEATH WITHIN FIFTEEN DAYS AFTER THE
ACCIDENT SHALL FORWARD A WRITTEN REPORT OF THE
ACCIDENT TO THE DEPARTMENT OF PUBLIC SAFETY ON
A FORM PRESCRIBED BY THAT DEPARTMENT, THAT THE
REPORT MUST CONTAIN CERTAIN INFORMATION, AND
THAT FAILURE TO FILE THE REPORT, IN THE PROPER
VERIFIED MANNER, IS PRIMA FACIE EVIDENCE THAT THE
VEHICLE WAS NOT PROPERLY REGISTERED; TO AMEND
SECTION 38-77-110, AS AMENDED, RELATING TO
AUTOMOBILE INSURERS, THE REQUIREMENT UPON
INSURERS TO INSURE, AND EXCEPTIONS, SO AS TO
PROVIDE FURTHER REASONS WHICH CANNOT BE USED BY
AN INSURER, AGENT, OR BROKER REFUSING TO WRITE OR
RENEW SUCH COVERAGE, WITH PENALTIES, AND
PROVIDE THAT AN APPLICANT DENIED COVERAGE MUST
BE PROVIDED IN WRITING BY THE DENYING INSURER THE
REASON OR REASONS FOR WHICH THE APPLICANT HAS
BEEN REFUSED INSURANCE BY THAT INSURER AT THE
TIME OF THE DENIAL; TO AMEND TITLE 38, CHAPTER 77,
RELATING TO AUTOMOBILE INSURANCE, BY ADDING
ARTICLE 13 SO AS TO PROVIDE FOR A JOINT
UNDERWRITING ASSOCIATION AND PROVIDE, AMONG
OTHER THINGS, FOR THE ABOLISHMENT OF THE
REINSURANCE FACILITY; TO AMEND SECTION 38-73-455,
AS AMENDED, RELATING TO AUTOMOBILE INSURANCE
RATES, SO AS TO DELETE CERTAIN LANGUAGE AND
PROVISIONS, AND PROVIDE, AMONG OTHER THINGS,
THAT AN AUTOMOBILE INSURER SHALL OFFER FOUR,
RATHER THAN TWO, DIFFERENT RATES FOR AUTOMOBILE
INSURANCE, THAT INSURERS MUST FILE RATES FOR
PERSONAL PROTECTION POLICIES AS DEFINED BY
SECTION 38-78-30 AND REVISED RATES FOR ALL OTHER
PRIVATE PASSENGER AUTOMOBILE INSURANCE POLICIES
WRITTEN BY THEM, INCLUDING A "PREFERRED"
RATE, A "STANDARD" RATE, A
"NONPREFERRED" RATE, AND A
"SUBSTANDARD" RATE, AND THAT MEMBER
COMPANIES OF AN AFFILIATED GROUP OF AUTOMOBILE
INSURERS MAY UTILIZE DIFFERENT FILED RATES FOR
AUTOMOBILE INSURANCE COVERAGES; TO AMEND
SECTION 56-10-270, RELATING TO THE OPERATION OF AN
UNINSURED MOTOR VEHICLE AND PENALTIES, SO AS TO
CHANGE THE PENALTIES, INCLUDING PROVISIONS FOR,
AMONG OTHER THINGS, THE PERFORMANCE OF VARYING
AMOUNTS OF PUBLIC SERVICE; TO AMEND THE 1976 CODE
BY ADDING SECTION 38-77-116 SO AS TO PROVIDE THAT
UPON ISSUANCE OF A NEW PRIVATE PASSENGER
AUTOMOBILE INSURANCE POLICY, THE INSURANCE
COMPANY OR AGENT MUST REVIEW WITH THE NEW
APPLICANT A LIST OF DRIVING OFFENSES AND THE
RELATED FINE AND PUNISHMENT, AS WELL AS POSSIBLE
INCREASE IN RATES, EFFECT OF SURCHARGES, OR THE
EFFECT OF THE LOSS OF THE SAFE DRIVER DISCOUNT,
AND PROVIDE THAT THIS LIST MUST BE ON AN APPROVED
FORM AND MUST ACCOMPANY THE POLICY; TO PROVIDE
THAT THE GOVERNING BOARD OF THE JOINT
UNDERWRITING ASSOCIATION SHALL CONTRACT WITH
ONE OR MORE INSURERS OR BUSINESS ENTITIES TO
SERVE AS THE DESIGNATED CARRIER AND SHALL
ESTABLISH A PROCEDURE FOR THE SELECTION OF THE
DESIGNATED CARRIER, PROVIDE THAT COMMISSIONS
PAID TO AGENTS FOR POLICIES CEDED TO OR PLACED IN
THE JOINT UNDERWRITING ASSOCIATION MUST BE SET
BY THE ASSOCIATION'S BOARD OF DIRECTORS, AND
PROVIDE FOR RELATED MATTERS; TO AMEND SECTION
56-10-270, RELATING TO THE OPERATION OF AN
UNINSURED MOTOR VEHICLE, SO AS TO CHANGE THE
PENALTIES THEREFOR; TO AMEND SECTION 38-77-111,
RELATING TO AUTOMOBILE INSURANCE POLICIES WHICH
MAY BE CEDED TO THE REINSURANCE FACILITY, SO AS
TO PROVIDE THAT AN INSURER MAY CEDE THE
COVERAGES OF AN AUTOMOBILE INSURANCE POLICY
THAT IT IS MANDATED TO WRITE TO THE JOINT
UNDERWRITING ASSOCIATION, RATHER THAN THE
REINSURANCE FACILITY, BUT IT MAY NOT CEDE
COVERAGES UNDER A POLICY THAT IT IS NOT MANDATED
BY LAW TO WRITE EXCEPT FOR TORT LIABILITY AND
PERSONAL PROTECTION COVERAGES AND UNINSURED
MOTORIST COVERAGE FOR THOSE RISKS THAT DO NOT
QUALIFY FOR THE SAFE DRIVER DISCOUNT; TO REPEAL
ARTICLE 5, CHAPTER 77, TITLE 38, RELATING TO THE
SOUTH CAROLINA REINSURANCE FACILITY AND
DESIGNATED PRODUCERS; TO REPEAL SECTIONS
38-73-1420, RELATING TO THE FILING OF AN EXPENSE
COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE
INSURANCE RATE OR PREMIUM CHARGES BY THE BOARD
OF GOVERNORS OF THE REINSURANCE FACILITY,
38-73-1425, RELATING TO THE FINAL RATE OR PREMIUM
CHARGE FOR PRIVATE PASSENGER AUTOMOBILE
INSURANCE RISK CEDED TO THE REINSURANCE FACILITY,
38-77-285, RELATING TO THE REQUIREMENT THAT ALL
AUTOMOBILE INSURANCE COVERAGES WRITTEN BY AN
INSURER FOR AN INSURED'S AUTOMOBILE MUST BE
WRITTEN IN THE SAME POLICY AND THE PROVISION THAT
THIS SECTION APPLIES ONLY TO INSURANCE POLICIES
COVERING VEHICLES ELIGIBLE TO BE CEDED TO THE
REINSURANCE FACILITY, 38-77-920, RELATING TO THE
PROVISION THAT AUTOMOBILE INSURERS AND AGENTS
MAY NOT REFUSE ACCEPTANCE OF INSURANCE, THE
PROPERTY RIGHTS OF CERTAIN AGENTS, AND
RESTRICTION OF MAILINGS TO CERTAIN AREAS, 38-77-940,
RELATING TO AUTOMOBILE INSURANCE, AVOIDING
CERTAIN CLASSES OR TYPES OF RISKS, EXCEPTIONS, AND
CANCELING AN AGENT'S REPRESENTATION, 38-77-950,
RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE
REINSURANCE FACILITY BY AN INSURER AND NOTICE TO
A POLICYHOLDER THAT HIS POLICY IS IN THE FACILITY,
AND 38-77-960, RELATING TO AUTOMOBILE INSURANCE
AGENT'S BUSINESS; TO PROVIDE FOR THE SEVERABILITY
OF THE PROVISIONS OF THIS ACT, EXCEPT THAT IF
SECTION 38-78-110 OR SECTION 38-78-120 IS FOUND
UNCONSTITUTIONAL OR INVALID IT IS TO BE
CONCLUSIVELY PRESUMED THAT THE GENERAL
ASSEMBLY WOULD NOT HAVE ENACTED THE REMAINDER
OF THIS ACT WITHOUT SUCH LIMITATIONS AND THE
ENTIRE ACT IS INVALID; AND TO PROVIDE THAT IF
SECTION 38-78-110 IS FOUND TO BE UNCONSTITUTIONAL
OR INVALID, PERSONAL PROTECTION INSURERS HAVE NO
OBLIGATION TO PAY PERSONAL PROTECTION BENEFITS
WITH RESPECT TO ACCIDENTS OCCURRING ON OR AFTER
THE DATE OF THE FINDING OF SUCH
UNCONSTITUTIONALITY OR INVALIDITY AND ARE
SUBROGATED TO ALL OF THE RIGHTS OF PERSONAL
PROTECTION INSUREDS FOR ALL PREVIOUS SUCH
BENEFITS PAID.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 38 of the 1976 Code is amended by adding:
"CHAPTER 78
Consumer Freedom of Choice in
Motor Vehicle Insurance
Section 38-78-10. This chapter may be cited as the 'Consumer
Freedom of Choice in Motor Vehicle Insurance Act'.
Section 38-78-20. (A) Under existing law, the ability of a person
to recover losses incurred as a result of a motor vehicle accident is
limited by factors over which the accident victim has no control. The
recovery is dependent on the conduct of the other driver, the amount
of liability insurance carried by the other driver, and the financial
resources of the other driver. Two individuals who have received
identical injuries may recover markedly different amounts. Under
existing law, many individuals receive little or no compensation for
their losses.
(B) This chapter gives motorists the right to choose the kinds of
personal protection available in case of an automobile accident and
the amount of financial protection they deem appropriate and
affordable. Instead of being forced to buy traditional fault liability
insurance to protect strangers, motorists will have the opportunity to
buy a new personal protection policy to protect themselves and their
family members regardless of fault in the event of a motor vehicle
accident. Motorists will also have the right to reject the provisions
of this chapter, and thus retain all rights to sue and be sued for both
economic and noneconomic loss based on fault, under the existing
fault liability insurance system.
(C) The interaction between traditional fault liability insurance and
the personal protection policy is as follows:
(1) Motorists who choose the traditional fault liability insurance
and who are involved in an accident with any other motorist
essentially will retain the system existing now where they have the
opportunity to claim and sue based on fault for both economic and
noneconomic damages. They will also remain subject to being sued
for such liability to others based on fault.
(2) Motorists who choose the new personal protection policy
system established by this chapter and who are involved in an
accident with a motorist who has chosen traditional fault liability
insurance will be promptly compensated for their own economic
losses regardless of fault. A personal protection insured can claim
against and sue the other motorist, based on fault, for economic
damages if the damages exceed their personal protection limits and
for noneconomic damages if their injury exceeds the verbal threshold.
They will also remain in this circumstance subject to being sued for
such liability to others based on fault.
(3) Two motorists who each choose the personal protection
policy and who are involved in an accident with each other will be
promptly compensated under their own policies for their own
economic losses regardless of fault. In this situation, the two
motorists who have chosen the personal protection policy do not have
the right to claim and sue for full damages based on fault unless the
injury exceeds the verbal threshold but if either suffers a loss in
excess of his or her policy's benefit levels, that person retains the
right to claim and sue for uncompensated economic loss based on
fault.
(4) If a motorist who has chosen fault liability insurance is
involved in an accident with an uninsured motorist, the policyholder
can be compensated for losses under the uninsured motorist
provisions of his or her own policy based on fault and has the right
to claim against and sue the uninsured motorist for full damages
based on fault. The uninsured motorist forfeits any right to claim for
property damage up to ten thousand dollars and for noneconomic loss
against the motorist who has chosen fault liability insurance, except
where the motorist choosing fault liability insurance was driving
under the influence of alcohol or illegal drugs or committed
intentional misconduct.
(5) If a motorist who has chosen the personal protection policy
is involved in an accident with an uninsured motorist, the
policyholder will be promptly compensated for economic losses
under his or her personal protection policy regardless of fault and has
the right to claim against and sue the uninsured motorist for
noneconomic damages based on fault if the injury exceeds the verbal
threshold. The uninsured motorist forfeits any right to claim for the
first ten thousand dollars of property damage and for noneconomic
loss against the motorist who has chosen the personal protection
policy, except where such motorist was driving under the influence
of alcohol or illegal drugs or committed intentional misconduct.
(D) The initial rate to be charged by each automobile insurer for
the basic personal protection policy required by this act shall be at
least fifteen percent lower than the approved rate for the minimum
limits prescribed by Sections 38-77-140 and 38-77-150 by class and
territory for each automobile insurance risk in effect on September
30, 1998. The rate for the basic personal protection policy cannot be
increased for automobile insurance policies issued or renewed with
effective dates between October 1, 1998, through September 30,
1999.
(E) A motorist who purchases the personal protection policy will
have five thousand dollars of property damage liability insurance as
part of his mandatory coverage.
(F) To the extent the terms of Section 38-78-20 may differ from
the terms of Section 38-78-30, the terms of Section 38-78-30 govern.
Section 38-78-30. As used in this chapter, unless the context
otherwise requires:
(A) 'Accidental bodily injury' means bodily injury, sickness, or
disease, or death resulting therefrom, arising out of the ownership,
operation, or use of a motor vehicle, or while occupying such vehicle,
which is accidental as to the person insured.
(B) 'Added personal protection' means an optional policy, plan, or
coverage for personal protection which each insurer issuing motor
vehicle liability insurance in this State shall make available in the
limits set by Section 38-77-110(B)(5).
(C) 'Basic personal protection' means a policy, plan, or coverage
for personal protection which provides benefits for net loss resulting
from accidental bodily injury resulting from a motor vehicle accident
and liability coverage in at least the amounts prescribed by Section
38-77-140. Basic personal protection benefits consist of the
following, with an aggregate limit of fifteen thousand dollars per
person arising out of one motor vehicle accident:
(1) medical expenses;
(2) loss of income from work, up to two hundred dollars per
week;
(3) replacement services loss, up to one hundred dollars per
week;
(4) death benefits of five thousand dollars if the death of the
injured person occurs within one year after the date of a motor
vehicle accident and was a direct result of the accident.
Each basic personal protection insurer is permitted to incorporate
in added personal protection benefits coverage such terms,
conditions, and exclusions as may be consistent with the premiums
charged.
Motorcycles may not be covered by a personal protection policy.
(D) 'Cause of action for injury' means a claim for accidental bodily
injury for economic or noneconomic loss, or both, caused by the
negligent conduct or intentional misconduct of another person, and
includes a claim by any person other than a person suffering
accidental bodily injury based on such injury including, but not
limited to, loss of consortium, companionship, or any derivative
claim.
(E) 'Director' means the Director of the Department of Insurance
or his designee.
(F) 'Dependent' means all persons related to another person by
blood, marriage, adoption, or otherwise who reside in the same
household at the time of the accidental bodily injury and receive
financial services or support for him or her.
(G) 'Economic loss' means actual pecuniary loss and actual
monetary expenses incurred by or on behalf of an injured person as
the result of an accidental bodily injury consisting only of medical
expense, work loss, replacement services loss, and death benefits.
(H) 'Governmental unit' means the United States government, the
government of the State of South Carolina, and any agency,
authority, board, department, division, commission, institution,
bureau, or like governmental entity of either such government, or any
local government in this State, and such units thereof including, but
not limited to, counties, cities, towns, and other regional
governments.
(I) 'Injured person' means a person who sustains accidental bodily
injury when eligible for benefits under a policy providing personal
protection. The term also includes, where appropriate, the personal
representative of an estate.
(J) 'Intentional misconduct' means conduct whereby harm is
intentionally caused or attempted to be caused by one who acts or
fails to act for the purpose of causing harm or with knowledge that
harm is substantially certain to follow when such conduct caused or
substantially contributed to the harm claimed for. A person does not
intentionally cause or attempt to cause harm
(1) merely because his or her act or failure to act is done with the
realization that it creates a grave risk of causing harm or
(2) if the act or omission causing bodily harm is for the purpose
of averting bodily harm to oneself or another person.
(K) 'Loss of income from work' means eighty percent loss of gross
income from the work the injured person would have continued to
perform if he or she had not been injured, reduced by any income
from substitute work actually performed by him or her or by income
he or she would have earned in available appropriate substitute work
he or she was capable of performing but unreasonably failed to
undertake. In order to be eligible for these benefits, the injured
person must have been in an occupational status, earning or
producing income, immediately prior to the accident. Loss of income
from work does not include any loss after the death of the injured
person, and payment for the period of disability shall not exceed two
years from the date of the accident.
Loss of income from work may be excluded from an insured's
policy, at the policyholder's request, with an appropriate reduction in
the premium.
(L) 'Medical expenses' means usual and customary amounts
incurred by an injured person for necessary medical, surgical,
radiological, dental, chiropractic, ambulance, hospital, medical
rehabilitation and professional nursing services, eyeglasses, hearing
aids, and prosthetic devices. Medical expense may include
nonmedical remedial treatment rendered in accordance with a
recognized religious method of healing. The words 'incurred by'
include medical expenses incurred on behalf of an injured person by
a parent or guardian if the injured person is a minor or incompetent,
or by a surviving spouse if the injured person is deceased. Personal
protection insurers may review medical expenses to assure that the
expenses are reasonable and necessary according to generally
accepted standards of medical practice. Under basic personal
protection and added personal protection, medical expenses are
promptly payable to the injured person for covered expenses incurred
within two years after the date of the accident. 'Medical expenses' do
not include:
(1) that portion of a charge for a room in a hospital, clinic, or
convalescent or nursing home, or any other institution engaged in
providing nursing care and related services, in excess of a reasonable
and customary charge for semi-private accommodations, unless
medically required; or
(2) treatments, services, products, or procedures that are
experimental in nature, or for research, or not primarily designed to
serve a medical purpose, or which are not commonly and customarily
recognized throughout the medical profession and within the United
States as appropriate treatment of the accidental bodily injury, or
which are not performed by a professional licensed by the
professional's licensing board pursuant to Title 40.
(M) 'Medical rehabilitation' means rehabilitation services which
are reasonable and necessary to reduce the disability and help to
restore the pre-accident level of physical functioning of the injured
person.
(N) 'Motor vehicle' is defined by Section 38-77-30(7).
(O) 'Noneconomic loss' means any loss other than economic loss
and includes, but is not necessarily limited to, pain, suffering,
inconvenience, physical impairment, mental anguish, emotional pain
and suffering, hedonic damages, and loss of any of the following:
earning capacity, consortium, society, companionship, comfort,
protection, marital care, parental care, filial care, attention, advice,
counsel, training, guidance, or education. Noneconomic loss does
not include economic loss caused by pain and suffering or by
physical impairment.
(P) 'Occupying' means to be in or upon a motor vehicle or engaged
in the immediate act of entering into or alighting from the motor
vehicle.
(Q) 'Operation or use' means operation or use of a motor vehicle as
a motor vehicle including, incident to its operation or use as a
vehicle, occupying it. Operation or use of a motor vehicle does not
cover conduct within the course of a business of manufacturing,
selling, or maintaining a motor vehicle, including repairing,
servicing, washing, loading, or unloading, nor does it include such
conduct not within the course of such a business, unless such conduct
occurs while occupying a motor vehicle.
(R) 'Owner' means the person or persons, other than a lienholder
or secured party, who owns or has title to a motor vehicle or is
entitled to the use and possession of a motor vehicle subject to a
security interest held by another person. Owner does not include (i)
a lessee under a lease not intended as security, or (ii) the United
States of America or any agency thereof, except with respect to motor
vehicles for which it has elected to provide insurance.
(S) 'Person' includes an organization, public or private.
(T) 'Personal protection' means a policy, plan, or coverage which
provides basic or added personal protection benefits for loss resulting
from accidental bodily injury, regardless of fault.
(U) 'Personal protection insured' means:
(1) a person identified by name as an insured in a contract
providing personal protection benefits;
(2) while residing in the same household with a named insured,
the following persons:
(a) a spouse or other relative of a named insured; or
(b) a minor in the custody of a named insured. A person
resides in the same household if he or she usually makes his or her
home in the same family unit, even though he or she temporarily
lives elsewhere;
(3) a person with respect to accidents within this State who
sustains accidental bodily injury while occupying or when struck as
a pedestrian by a motor vehicle insured for personal protection,
unless the person has rejected the coverage under Section 38-78-120.
(V) 'Personal protection insurer' means an automobile insurer
providing personal protection benefits.
(W) 'Replacement services loss' means expenses reasonably
incurred in obtaining ordinary and necessary services from others,
not members of the injured person's household, in lieu of those the
injured person would have performed for the benefit of the
household. Replacement services loss does not include any loss
incurred after the death of an injured person, and the disability period
shall not exceed two years from the date of the accident.
(X) 'Resident relative' means a person related to the owner of a
motor vehicle by blood, marriage, adoption, or otherwise and residing
in the same household. A person resides in the same household if he
or she usually makes his or her home in the same family unit, even
though temporarily living elsewhere.
(Y) 'Serious injury' means an accidental bodily injury which results
in death, serious and permanent loss of an important bodily function,
permanent and serious bodily injury determined objectively within
reasonable medical probability, or serious and permanent
disfigurement.
(Z) 'Uncompensated economic loss' means that portion of
economic loss arising out of an accidental bodily injury of an injured
person which exceeds the benefits provided by a personal protection
insurer under a policy providing such benefits (except for loss
incurred by a deductible under such a policy) and collateral sources.
(aa) 'Uninsured motorist' means the owner or operator of a motor
vehicle uninsured for either basic personal protection or liability
insurance at the limits prescribed by this state's financial
responsibility laws or who otherwise fails to comply with the
financial responsibility laws of this State.
(bb) 'Uninsured motor vehicle' means a motor vehicle required
to be registered as to which (i) there is no bodily injury liability
insurance and property damage liability insurance, (ii) no bond has
been given or cash or securities delivered in lieu thereof, (iii) the
owner has not qualified as a self-insurer, and (iv) there is no basic or
added personal protection insurance as defined in Section 38-78-30.
(cc) 'Reasonable and necessary' means usual and customary
charges for necessary medical treatment.
(dd) 'Permanent' means an injury whose effects cannot be
eliminated by further time for recovery or by further treatment and
care, including surgery.
(ee) 'Prevailing party' means the insured deemed to be the
'prevailing party' for purposes of this section if the award is at least
the amount requested in writing of the insurer not less than ten days
prior to the trial. The insurer shall be deemed to be the prevailing
party if the award is no more than the amount offered by the insurer
in writing not less than ten days prior to the trial. There shall be 'no
prevailing party' if the award is more than offered by the insurer, but
less than requested by the insured.
(ff) 'Reasonable proof' means itemized medical bills or other
medical records necessary to determine specific patient information,
dates of treatment, a specific diagnosis, the specific services rendered
and the specific charges for each of the services rendered. If an
insurer requests information in addition to the proof submitted, they
must specifically identify the additional information needed and why
it is needed.
(gg) 'Serious' means only an injury which has a substantial
bearing on the injured person's ability to resume substantially all of
his normal activities and lifestyle.
Section 38-78-40. Each motor vehicle required to be registered in
this State shall be insured for basic personal protection as defined by
Section 38-78-30(C) and security for payment of tort liabilities as
required by Section 38-77-140, unless the owner of the motor vehicle
exercises his or her right of rejection under Section 38-78-120. This
insurance may be provided by a contract of insurance or by
qualifying as a self-insurer in compliance with Section 56-9-60.
An insurance policy written by a personal protection insurer under
this chapter to provide basic personal protection is deemed to include
all coverages required by this chapter, including the minimum tort
liability coverage. Coverage under basic personal protection meets
the requirements of this state's financial responsibility laws.
Section 38-78-50. Every personal protection insured must be
offered uninsured motorist coverage as required by Section
38-77-150. Additional uninsured motorist coverage and
underinsured motorist coverage must be offered to the insured as
required by Section 38-77-160. All other provisions, rights, and
obligations in Sections 38-77-150 and 38-77-160 apply to the
personal protection insured and the insurer. A personal protection
insured may not recover under the uninsured motorist provision of
the personal protection policy if the personal protection insured was
at fault in the accident. Noneconomic damages may only be
recovered under this provision if the threshold as defined in Section
38-78-110 is reached.
Section 38-78-55. Regardless of the number of motor vehicles
involved, policies issued, persons covered, claims made, or premiums
paid, the liability limits for multiple coverages under one or more
automobile insurance policies must not be combined or added
together to determine the maximum limit of coverage available to an
injured person. Unless the insurance policy or contract clearly
provides otherwise, the policy or contract may provide that if two or
more policies, plans, or coverages apply equally to the same accident,
the highest limit of liability applicable is the maximum amount
available to an injured person under any one of the policies, plans, or
coverages.
Section 38-78-60. (A) A personal protection insurer shall pay to
a personal protection insured benefits for accidental bodily injury
sustained within the United States, its territories, or possessions or
Canada.
(B) A personal protection policy issued in this State contains
coverage such that it satisfies the liability insurance requirements of
the financial responsibility laws of any other state or Canadian
province in which the insured motor vehicle is operated.
Section 38-78-70. (A) A personal protection insurer has no
obligation to provide benefits to or on behalf of an injured person
who at the time of the accident:
(1) was involved in a motor vehicle accident while committing
a felony or while voluntarily occupying a motor vehicle that he or she
knew to be stolen. If the person dies as a result of his or her own
intentional misconduct, his or her survivors are not entitled to
personal protection for loss arising from the decedent's injury or
death;
(2) was driving under the influence of alcohol or illegal drugs;
(3) was occupying an uninsured motor vehicle owned by the
person;
(4) was guilty of intentional misconduct. If the person dies as
a result of his or her own intentional misconduct, his or her survivors
are not entitled to personal protection for loss arising from the
decedent's injury or death;
(5) has rejected the limitation on his or her right to sue under
Section 38-78-120;
(6) was an uninsured motorist;
(7) was operating or occupying a motor vehicle with three or
fewer load-bearing wheels;
(8) was operating an insured vehicle without the express or
implied consent of the owner; or
(9) was injured while occupying a motor vehicle owned by, or
furnished or available for the regular use of the injured person or the
injured person's resident spouse or relative, if such motor vehicle is
not described in the policy under which a claim is made, or is not a
newly acquired or replacement motor vehicle covered under the terms
of the policy.
(B) A personal protection insurer may include in personal
protection coverage any person under subsection (A) if the insurer
states its intent to do so clearly on the policy.
Section 38-78-80. At the option of the personal protection insurer,
personal protection benefits are payable to any of the following
persons:
(1) the injured person;
(2) the parent or guardian of the injured person, if the injured
person is a minor or incompetent;
(3) a survivor, executor, or administrator of the injured person; or
(4) any other person or organization rendering the services for
which payment is due.
Section 38-78-90. (A) Subject to Section 38-78-80, a person who
is entitled to receive personal protection benefits may claim the
benefits in the following order up to the limits of personal protection
in the listed category:
(1) personal protection covering the motor vehicle involved in
the accident, if the person injured was an occupant of or was struck
by the motor vehicle. If the personal protection insurer providing
such insurance disclaims coverage, the injured person shall be
entitled to benefits under any contract of personal protection
insurance under which he is a personal protection insured and the
insurer making such payments shall be entitled to contest the
disclaimer and seek full reimbursement from the insurer disclaiming
coverage;
(2) the personal protection under which the injured person is or
was an insured.
(B) If two or more insurers at the same priority level are obligated
to pay personal injury benefits, the insurer against whom the claim is
first made shall pay the claim and may thereafter, recover pro rata
contributions from any other insurer at the same priority level for the
cost of the payments and for processing the claim. Disputes among
insurers may be resolved only by inter-company arbitration or
inter-company agreement. For purposes of this section, an
unoccupied parked motor vehicle is not a motor vehicle involved in
an accident unless it is parked in such a way as to cause an
unreasonable risk of injury.
Section 38-78-100. (A) A personal protection insurer is
obligated to indemnify an injured person, except that benefits payable
for the same accidental bodily injury under state-mandated disability
coverage or workers' compensation or similar occupational
compensation act shall be subtracted from the personal protection
benefits payable to the injured person.
(B) A basic personal protection insurer must offer a deductible to
the named insured of a personal protection policy in the amounts of
two hundred fifty dollars, five hundred dollars, and one thousand
dollars to apply with respect to a claim by the named insured or a
person residing in the same household with the named insured. If the
named insured accepts such offer, the rate must be reduced for such
coverage in an amount filed by the insurer and approved by the
director. The named insured is not required to accept the offer and
may choose personal protection coverage without a deductible other
than for property damage caused by an uninsured motorist.
Section 38-78-110. (A) Any person who registers, operates,
maintains, or uses a motor vehicle on the public roadways of this
State and their resident relatives shall, as a condition of such
registration, operation, maintenance, or use of such motor vehicle and
use of the public roadways shall be conclusively presumed to have
accepted the limitations on his tort rights and liabilities in this chapter
unless he has filed a rejection under Section 38-78-120.
(B) Tort liability with respect to accidents occurring in this State
and arising out of the ownership, maintenance, or use of a motor
vehicle is abolished with respect to any person entitled to benefits
pursuant to Section 38-78-30(C) except to the extent such person has
sustained an injury as defined in subsection (C) of this section or
except to the extent such person has sustained actual economic loss
in excess of the limits of any applicable personal protection policy.
However, no person may recover noneconomic loss for personal
injury except as provided in subsection (C).
(C) In any action of tort brought against the owner, registrant,
operator, or occupant of a motor vehicle with respect to which
security has been provided as required in this chapter, or against any
person or organization legally responsible for his acts or omissions,
a plaintiff may recover damages in tort for pain, suffering, mental
anguish, and inconvenience because of bodily injury, sickness, or
disease arising out of the ownership, maintenance, operation, or use
of such motor vehicle only in the event that the injury reaches one of
the following thresholds:
(1) the injury or disease consists in whole or in part of
permanent and serious disfigurement;
(2) permanent and serious bodily injury, determined objectively,
within reasonable medical probability;
(3) permanent and serious loss of an important bodily function;
or
(4) death.
(D) In any action where the defendant contends that the plaintiff's
injury does not meet the standards set forth in subsection (C), either
party may seek summary judgment on that issue. If a motion is
made, the court may determine at least thirty days before the date set
for trial whether there is a material issue of fact as to whether the
injury meets the standards of subsection (C) or if not, render
summary judgment in accordance with the undisputed facts. If the
facts regarding the nature of the injury are undisputed, the question
as to whether or not the facts render the injury as meeting the
standards of subsection (C) is a question of law to be decided by the
court. In any action to be tried before a jury where the defendant
contends the plaintiff's injury is not a serious and permanent injury
but the defendant concedes or the court determines that there is a
material issue of fact as to whether the plaintiff's injury meets the
standards of subsection (C) then, upon motion of the defendant, that
issue shall be separately tried and no other evidence as to plaintiff's
noneconomic loss shall be received until that issue has been resolved.
After resolution of that issue, the amount of the plaintiff's
noneconomic loss may be tried before the same jury or a different
jury, as the court may in its discretion decide.
Section 38-78-120. (A) Any person may refuse to consent to the
limitations on his tort rights and liabilities. To ensure preservation of
the right to choose to reject any limitations on tort rights and liability
contained in this chapter, any person may execute a form approved
by the director for rejecting such limitations. Within sixty days after
the enactment of this chapter, a temporary committee composed of
the director, the Consumer Advocate, two representatives of the
South Carolina Bar, (one specializing in the defense of claims and
one specializing in the prosecution of claims) appointed by the
Governor, a representative of an automobile insurer appointed by the
Consumer Advocate, a member of the judiciary appointed by the
Chief Justice of the Supreme Court, an insurance agent appointed by
the director, and one person specializing in readability appointed by
the Governor shall formulate the rejection form to be used by all
insurers in South Carolina. The rejection forms for personal
protection insurance shall meet the readability index of no higher
than the ninth grade level on the Flesch Reading Ease Test. The
committee shall also develop a brochure at no higher than the ninth
grade level that must be enclosed with the policyholder's renewal
notice the first time the policy is renewed after the effective date of
this chapter.
(B) The form shall establish the effective date of such a rejection.
Any rejection by a person who is under a legal disability shall be
made on behalf of such person by a parent, legal guardian,
conservator, or committee and shall remain in effect until revoked or
until the person is no longer under legal disability, whichever is
sooner. The failure of such guardian, parent, conservator, or
committee of a person under a legal disability to file a rejection,
within six months from the date that this chapter would otherwise
become applicable to such person, is deemed to be an affirmative
acceptance of the limitations on tort liability. Any person who at the
time of an accident does not have basic personal protection but has
not formally rejected such limitations and has in effect security
equivalent to that required by Section 38-77-140 is deemed to have
fully rejected the tort limitations for that accident only.
(C) A rejection of tort limitations must be immediately filed with
the insurance company or agent who provides the insurance policy
and is effective on the effective date of the policy. The rejection
applies to any motor vehicle accident occurring on or after that date.
The rejection remains effective until it is revoked in writing on a
form approved by the director at the time of renewal or issuance of
a new policy by the purchase of a tort policy. The revocation of the
rejection is effective until it is withdrawn in a manner prescribed by
the director. The rejection form must be provided by the insurer or
agent to the insured upon the written request of the insured or the
request of a person with the legal capacity to ask for the insured.
(D) The director shall establish and maintain a program designed
to assure that all consumers are adequately informed about the
comparative cost of personal protection insurance and liability
insurance for those persons who choose to reject limitations on tort
rights and liabilities, as well as the benefits, rights, and
responsibilities of insureds under each type of insurance.
(E) A person who has personal protection coverage or who rejects
tort limitations on a form approved by the director is bound by that
choice and is precluded from claiming liability of any party based on
being inadequately informed as to the coverage or rejection. This
restriction also applies to relatives residing in the same household
who are covered by the same policy.
(F) Each motor vehicle insurer issuing motor vehicle liability
insurance in this State may require that all policies within a
household be either personal protection policies or liability policies
which satisfy the financial responsibility laws of this State. However,
policies purchased separately by members of the same household
may be different policies.
(G) To further insure preservation of the right to reject the
limitations on tort rights contained in this chapter, the director shall
establish procedures whereby any person who does not own a motor
vehicle and who is not a resident relative of such an owner may, after
sustaining accidental bodily injury, execute a form prescribed by the
director for rejecting such limitation within sixty days after the date
of the accident. If any personal protection benefits are paid before
the rejection is effective, the personal protection insurer has a right
of subrogation for any payments made through a tort recovery.
Section 38-78-125. (A) A person may bring a cause of action for
injury against a person who caused him actual economic loss, for any
uncompensated economic loss.
(B) A person suffering accidental bodily injury while occupying
or when struck by a motor vehicle which is insured for personal
protection and who is not at the time of the accident covered by a
rejection of limitations on tort rights and liabilities under Section
38-78-120 and is not an uninsured motorist may receive personal
protection benefits applicable to the motor vehicle and has a right to
claim uncompensated economic loss against the personal protection
insured. A person who files a claim under this subsection has the
same rights and duties as a personal protection insured with respect
to a claim by that insured.
(C) An uninsured injured motorist may not claim in tort for
property damage except for such damage that exceeds ten thousand
dollars or for noneconomic damages, unless the motor vehicle
operator is driving under the influence of alcohol or illegal drugs or
is guilty of intentional misconduct. An uninsured motorist retains
fault liability with respect to others. A person driving under the
influence of alcohol or illegal drugs may not claim in tort for either
economic or noneconomic damages against a person who has rejected
tort limitations. A person who rejects tort limitations shall not collect
personal protection benefits unless he or she has revoked his or her
rejection under Section 38-78-120(C).
(D) A personal protection insured has a cause of action against
another personal protection insured for property damage to recover
any required deductible.
Section 38-78-140. (A) Personal protection benefits are payable
monthly as loss accrues. Loss accrues not when the injury occurs but
as work loss, replacement services loss, or medical expense is
incurred. The benefits are overdue if they are not paid within thirty
days after the personal protection insurer receives reasonable proof
of the fact and the amount of loss sustained, except that a personal
protection insurer may accumulate claims for a period not to exceed
thirty days, in which case benefits are not overdue if they are paid
within twenty days after the period of accumulation. If reasonable
proof is not supplied for the whole claim, the amount supported by
reasonable proof is overdue if it is not paid within thirty days after
the proof is received by the insurer. Any part or all of the remainder
of the claim that is later supported by reasonable proof is overdue if
it is not paid within thirty days after the proof is received by the
insurer. To determine the extent to which any benefits are overdue,
a payment is treated as made on the date a draft or other valid
instrument is mailed or, if not so posted, the date of delivery. The
personal protection insurer may pay personal protection benefits
directly to a person who supplies necessary products, services, or
accommodations to the injured person. All overdue payments shall
bear an annual eighteen percent interest rate.
(B) In addition to the interest payments, if the insured has filed suit
to recover overdue payments, the insured shall be entitled to
reasonable attorney's fees and costs incurred in such suit. The
recovery set forth here is the exclusive remedy for an insurer's failure
to pay or delay in paying personal protection benefits for conduct of
an insurer arising out of the manner in which the insurer denied or
delayed payment. An attorney shall not charge a separate fee to
collect benefits except those incurred in connection with the suit for
overdue payments. In any action by or on behalf of an insurer, a
provider or an insured, attorney's fees shall be awarded only to the
prevailing party.
(C) An insurer who rejects a claim for basic personal protection
benefits shall give to the claimant prompt written notice of the
rejection, specifying the reason.
Section 38-78-150. (A) Personal protection benefits except
medical benefits are exempt from garnishment, attachment,
execution, or any other process or claim to the extent that wages or
earnings are exempt under any applicable law.
(B) An agreement for assignment of any right to personal
protection benefits payable in the future, except for medical benefits,
is unenforceable except to the extent that the benefits are for the cost
of products, services, or accommodations provided or to be provided
by the assignee or that the benefits are for loss of income from work
or replacement services and are assigned to secure payment of
alimony, maintenance, or child support.
Section 38-78-160. An insurer is allowed a reasonable attorney fee
for defending a claim for benefits that is fraudulent or so excessive
as to have no reasonable foundation. The fee may be treated as an
offset against benefits due or which thereafter accrue. The insurer
may recover from the claimant any part of the fee not offset or
otherwise paid.
Section 38-78-170. An insurer under a policy of personal
protection insurance may require written notice to be given as soon
as practicable after an accident involving a secured vehicle for which
it provides coverage.
Section 38-78-190. If no personal protection benefits have been
paid other than death benefits, a person may bring an action against
the personal protection insurer not later than two years after the
accidental bodily injury occurred. If personal protection benefits
have been paid, a person may bring an action to recover further
benefits not later than two years after the last payment of benefits or
four years after the date the accidental bodily injury occurred,
whichever is earlier.
Section 38-78-200. (A) If the mental or physical condition of an
injured person is material to any claim for past or future personal
protection benefits, the injured person shall submit to reasonable
mental or physical examinations by a physician or physicians
designated by the insurer, at the insurer's expense. The examinations
shall take place at a reasonably convenient time and location. A
personal protection insurer may include provisions of this nature in
a personal protection policy.
(B) If after a request by a personal protection insurer a person
refuses to submit to reasonable mental and physical examinations by
a physician or physicians designated by the insurer or refuses to
undergo mental or rehabilitation services payable by the insurer, the
insurer, on written notice, may deny benefits applicable to the period
during which the person refuses to submit to the examination.
Section 38-78-210. (A) On request by a claimant or personal
protection insurer, an employer shall provide information on a form
approved by the director, including the work records and earnings,
regarding an employee who has filed a claim for personal protection
benefits. On request of the claimant or insurer the information must
cover the period specified by the claimant or insurer making the
request and may include a reasonable period before, and the entire
period after, the injury.
(B) The claimant, upon request by the insurer, must provide to the
insurer the names and addresses of the physicians and medical
facilities rendering diagnosis or treatment in regard to the injury or
to a relevant injury and the claimant shall authorize the insurer to
inspect and copy any relevant medical records.
(C) Every physician or other health care provider including, but
not limited to, a hospital, clinic, or other medical institution
providing, before or after an injury resulting from a motor vehicle
accident upon which a claim for personal protection benefits is based,
any products, services, or accommodations in relation to that or any
other injury, or in relation to a condition claimed to be connected
with that or any other injury shall, if requested to do so by the
personal protection insurer against whom the claim has been made,
furnish a written report of the history, condition, treatment, and the
dates and costs of such treatment, of the injured person. Every such
physician or other health care provider, hospital, clinic, or other
medical institution shall also promptly produce and permit the
inspection and copying of its records regarding such history,
condition, and treatment, and the dates and costs of treatment. A
physician providing such information to a personal protection insurer
shall be entitled to a fee of fifty cents per page for providing copies
of the medical record, provided a minimum fee of ten dollars plus
postage is authorized. Physicians may charge other reasonable fees
for the production of other reports or information requested by the
personal insurance carrier.
(D) No cause of action for violation of a physician-patient
privilege or invasion of the right of privacy is allowed against any
physician or other health care provider, hospital, clinic, or other
medical institution complying with the provisions of this section.
(E) The person requesting records and a sworn statement under
this section shall pay all reasonable costs connected therewith.
(F) A court may order or prohibit discovery of any records under
this section in case of any dispute as to the right of a claimant or
insurer to discover the information required to be disclosed by this
section.
Section 38-78-240. A physician or other health care provider
including, but not limited to, a hospital, clinic, or other health care
institution rendering treatment to an injured person, may charge only
a reasonable amount for the products, services, and accommodations
rendered. The charge shall not exceed the amount the person or
institution customarily charges for the products, services, and
accommodations in cases not involving automobile insurance.
Section 38-78-260. The director shall adopt rules which
encourage personal protection insurers to institute incentives for
personal protection insureds to install, maintain, and make use of
injury-reducing devices such as seat and harness belts, air bags, and
child restraint systems.
Section 38-78-280. (A) Each insurer authorized to transact
business or transacting business in this State shall file with the
director a form approved by the director which states that any
contract of motor vehicle liability insurance, wherever issued,
covering the maintenance or use of a motor vehicle while the motor
vehicle is in this State, is deemed to satisfy Section 38-78-40 once the
vehicle has been continuously present in this State for thirty days
unless the named insured has rejected the limitations on tort rights
and liabilities under Section 38-78-120.
(B) If a person is entitled to personal protection benefits or their
equivalent under the requirements of more than one state, the person
shall elect to recover under the laws of one state. The election
represents the exclusive source of recovery of all personal protection
benefits, or their equivalent, paid or payable under the financial
responsibility requirements of that or any other state.
Section 38-78-290. All insurance coverages provided under this
chapter are subject to such terms, conditions, and exclusions which
have been approved by the director.
Section 38-78-325. The director may promulgate regulations for
effective administration which are fair, equitable, and consistent with
the purpose of this chapter."
SECTION 2. Section 38-77-30(1) of the 1976 Code, as last
amended by Act 443 of 1992, is further amended to read:
"(1) 'Automobile insurance' means automobile bodily injury
and property damage liability insurance, including medical payments
and uninsured motorist coverage, and automobile physical damage
insurance such as automobile comprehensive physical damage,
collision, fire, theft, combined additional coverage, and similar
automobile physical damage insurance and economic loss benefits as
provided by this chapter written or offered by automobile insurers.
An automobile insurance policy includes a motor vehicle liability
policy as defined in item (7) of Section 56-9-20 and any nonowner
automobile insurance policy which covers an individual private
passenger automobile not owned by the insured, a family member of
the insured, or a resident of the same household as the insured,
and also includes the personal protection policy as defined in
Section 38-78-30(C)."
SECTION 3. Section 38-77-110(B) of the 1976 Code, as added by
Act 148 of 1989, is amended by adding the following:
"(5) two hundred fifty thousand dollars for added personal
protection coverage as defined in Section 38-78-30(B)."
SECTION 4. Article 3, Chapter 77, Title 38 of the 1976 Code is
amended by adding:
"Section 38-77-355. (A) In a claim or action for personal
injury or wrongful death arising out of the ownership, operation, use,
or maintenance of a motor vehicle, the court shall admit into evidence
the total amount paid to the claimant from collateral sources, and the
court shall instruct the jury to deduct from its verdict the value of all
benefits received by the claimant from collateral sources.
(B) For purposes of this section, 'collateral sources' means
payments made to the claimant, or on his behalf, by or pursuant to:
(1) automobile liability, uninsured motorist, underinsured
motorist, or automobile accident insurance that provides health
benefits or income disability coverage;
(2) personal protection benefits paid or payable by law;
(3) payments made from a policy of automobile insurance by or
on behalf of a joint tortfeaser, either by way of settlement or
judgment.
(C) No claimant may make claim or demand, no court may order
payment, and no insurer may pay by way of settlement, covenant not
to sue, or trust or loan agreement for an item of damages to the extent
that the claimant has already received, or will receive, reimbursement
for that item as a result of a collateral source payment as defined in
this section."
SECTION 5. Section 38-77-30(4) of the 1976 Code is amended to
read:
"(4) 'Damages' includes both actual and
punitive damages only."
SECTION 6. Section 38-77-140 of the 1976 Code is amended to
read:
"Section 38-77-140. (A) No automobile insurance
policy may be issued or delivered in this State to the owner of a
motor vehicle or may be issued or delivered by an 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 persons defined as insured against loss from the liability imposed
by law for actual damages arising out of the ownership,
maintenance, or use of these 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 one person in any one accident and
subject to the limit for one person, thirty thousand dollars because of
bodily injury to 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. Nothing in this article prevents an insurer
from issuing, selling, or delivering a policy providing liability
coverage in excess of these requirements.
(B) An insurer shall also offer the insured, in accordance with
Section 38-77-350, a rider or endorsement for an additional premium
to cover such liability for punitive damages. The insured has the
option of accepting or refusing coverage for punitive damages.
As a result of passage of this section, all insurers offering
bodily injury liability coverage shall file with the director or his
designee, not later than ninety days after the effective date of this act,
revised premium rates for bodily injury liability coverage to be
effective on automobile insurance policies issued or renewed with
effective dates on or after October 1, 1998. The revised rates must be
approved by the director and reflect a reduction in the currently
approved premium rate for this coverage of at least one and one-half
percent. Insurers shall file with the director not later than sixty days
after the effective date of this act premium charges for the punitive
damages loss coverage. The premium rate for this coverage shall
become effective for the automobile insurance policies issued or
renewed with effective dates on or after October 1, 1998, and may
not be approved if it is more, when combined with the reduced
premium rate for the new bodily injury liability coverage with
limitations on the recovery of punitive damages, than the bodily
injury liability premium rate for that insurer on the effective date of
this act; however, after September 30, 1998, an insurer may apply to
the director or his designee for a rate adjustment for such coverage,
based on its actual experience."
SECTION 7. Section 38-77-150 of the 1976 Code, as last amended
by Section 807 of Act 181 of 1993, is further amended to read:
"Section 38-77-150. (A) No automobile insurance
policy or contract may be issued or delivered unless it contains a
provision by endorsement or otherwise, herein referred to as the
uninsured motorist provision, undertaking to pay the insured all sums
which he is legally entitled to recover as actual damages
from the owner or operator of an uninsured motor vehicle, within
limits which may be are no less than the
requirements of Section 38-77-140 and no more than the
insured's bodily injury and property damage liability limits.
The uninsured motorist provision shall also provide for no 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.
(B) Automobile insurers shall offer, at the option of the
insured and in the manner hereinafter described, higher limits of
uninsured motorist coverage in accordance with Section 38-77-350.
The offer of higher limits must be made in connection with every
initial application for an automobile insurance policy by including a
written explanation of the coverage and inquiry of the applicant, in
a form prescribed by the director, as to whether the applicant desires
to purchase uninsured motorist coverage with limits greater than the
mandatory coverages described in subsection (A). No such
explanation or inquiry need be made with respect to any renewal,
replacement, reinstatement, substitute, or modification of the policy.
An insured may, at any time and subject to the limits of this section,
specifically request in writing uninsured motorist coverage limits
greater than that provided on the current or any prior policy.
(C) Insurers shall offer on a form prescribed by the director
'nonstackable' policies of uninsured motorist coverage containing
policy provisions establishing that if the insured accepts this
offer:
(1) Regardless of the number of vehicles involved, persons
covered, number of premiums paid, or vehicles or premiums shown
on the policy or policies under which the insured might otherwise be
entitled to benefits, the coverage provided as to two or more motor
vehicles under the same or different policies may not under any
circumstances be added together, combined with, or stacked to
determine the limit of insurance coverage available to an injured
person for any one accident, except as provided in item (3) of this
subsection (C).
(2) If at the time of the accident the injured person is
occupying a motor vehicle, the uninsured motorist coverage available
to him is the coverage available as to that motor vehicle.
(3) If the injured person is occupying a motor vehicle which
is not owned by him or by a family member residing with him, he is
entitled to the highest limits of uninsured motorist coverage afforded
for any one vehicle as to which he is named insured. Such coverage
is excess over the coverage on the vehicle he is occupying.
(4) The uninsured motorist coverage provided by the
policy does not apply to the named insured who is injured while
occupying any vehicle owned by the named insured for which
uninsured motorist coverage was not purchased.
(5) If at the time of the accident the injured person is not
occupying a motor vehicle, he is entitled to select any one limit of
uninsured motorist coverage for any one vehicle afforded by a policy
under which he is insured as a named insured.
(6) In connection with the offer authorized by this
subsection, insurers shall inform the named insured, applicant, or
lessee, on a form prescribed by the director, of the limitations
imposed under this subsection and that such coverage is an
alternative to coverage without such limitations. If this form is
signed by a named insured, applicant, or lessee, it is conclusively
presumed that there was an informed, knowing acceptance of such
limitations, and neither the insurance company nor the insurance
agent has any liability to the insured for the insured's failure to
purchase stackable coverage. When the named insured, applicant, or
lessee has initially accepted such limitations, the acceptance applies
to any policy which renews, extends, changes, supersedes, reinstates
or replaces an existing policy unless the named insured requests
deletion of the limitations and pays the appropriate premium for the
coverage. Any insurer who provides coverage which includes the
limitations provided in this subsection shall file revised premium
rates with the Department of Insurance for such uninsured motorist
coverage to take effect before initially providing such coverage. The
revised rates must reflect the anticipated reduction in loss costs
attributable to such limitations but, in any event, must reflect a
reduction in the uninsured motorist coverage premium of at least
fifteen percent for policies with such limitations. Insurers shall file
within ninety days after the effective date of this act, revised
premium rates with the director or his designee to be effective on
automobile insurance policies issued or renewed with effective dates
on or after October 1, 1998.
(D) Premium rates made by insurers for uninsured motorist
coverage must be determined and regulated as premium rates for
automobile insurance generally are determined and regulated.
The director or his designee may prescribe shall
approve the form to be used in providing uninsured motorist
coverage and when prescribed and promulgated no other form
may be used.
(E) No action may be brought under the uninsured
motorist provision unless copies of the pleadings in the action
establishing liability are served in the manner provided by law upon
the insurer writing the uninsured motorist provision. The insurer has
the right to appear and defend in the name of the uninsured motorist
in any action which may affect its liability and has thirty days after
service of process on it in which to appear. The evidence of service
upon the insurer may not be made a part of the record.
(F) Benefits paid pursuant to this section are subject to
subrogation and assignment."
SECTION 8. Section 38-77-160 of the 1976 Code, as last amended
by Act 461 of 1994, is further amended to read:
"Section 38-77-160. (A) Automobile insurance
carriers insurers shall offer on a form prescribed by
the director, at the option of the insured, in accordance with
Section 38-77-350 uninsured underinsured
motorist coverage up to the limits of the insured's liability
coverage in addition to the mandatory coverage prescribed by Section
38-77-150. Such carriers shall also offer, at the option of the insured,
underinsured motorist coverage up to the limits of the insured
liability coverage to provide coverage in the event that damages are
sustained in excess of the liability limits carried by an at fault
insured or underinsured motorist or in excess of any damages cap or
limitation imposed by statute. If, however, an insured or named
insured is protected by uninsured or underinsured motorist coverage
in excess of the basic limits, the policy shall provide that the insured
or named insured is protected only to the extent of the coverage he
has on the vehicle involved in the accident. If none of the insured's
or named insured's vehicles is involved in the accident, coverage is
available only to the extent of coverage on any one of the vehicles
with the excess or underinsured coverage. up to the limits
selected for the insured's liability coverage to provide coverage in the
event the insured becomes legally entitled to collect damages from
the owner or operator of an underinsured motor vehicle, as defined
in Section 38-77-30(14). The maximum liability of the insurer under
the underinsured motorist coverage provided is the lesser of:
(1) the difference between the limit of underinsured motorist
coverage and the amount paid or payable to the insured by or for any
person or organization who is held legally liable for the bodily injury
or property damage, or
(2) the amount of damages sustained, but not recovered. In no
event may the liability of the insurer under such coverage be more
than the limits of underinsured motorist coverage provided.
(B) An insured entitled to benefits under an uninsured
motorist provision is not entitled to benefits under an underinsured
motorist provision. An insured entitled to benefits under an
underinsured motorist provision is not entitled to benefits under an
uninsured motorist provision.
(C) Insurers shall offer on a form prescribed by the director
'nonstackable' policies of underinsured motorist coverage containing
policy provisions establishing that if the insured accepts this offer:
(1) Regardless of the number of vehicles involved, persons
covered, number of premiums paid, or vehicles or premiums shown
on the policy or policies under which the insured might otherwise be
entitled to benefits, the coverage provided as to two or more motor
vehicles under the same or different policies may not under any
circumstances be added together, combined with, or stacked to
determine the limit of insurance coverage available to an injured
person for any one accident, except as provided in item (3) of this
subsection (C).
(2) If at the time of the accident the injured person is occupying
a motor vehicle, the underinsured motorist coverage available to him
is the coverage available as to that motor vehicle.
(3) If the injured person is occupying a motor vehicle which is
not owned by him or by a family member residing with him, he is
entitled to the highest limits of underinsured motorist coverage
afforded for any one vehicle as to which he is named insured. Such
coverage is excess over the coverage on the vehicle he is occupying.
(4) The underinsured motorist coverage provided by the policy
does not apply to the named insured who is injured while occupying
any vehicle owned by the named insured for which underinsured
motorist coverage was not purchased.
(5) If at the time of the accident the injured person is not
occupying a motor vehicle, he is entitled to select any one limit of
underinsured motorist coverage for any one vehicle afforded by a
policy under which he is insured as a named insured.
(6) In connection with the offer authorized by this subsection,
insurers shall inform the named insured, applicant, or lessee, on a
form prescribed by the director, of the limitations imposed under this
subsection and that such coverage is an alternative to coverage
without such limitations. If this form is signed by a named insured,
applicant, or lessee, it is conclusively presumed that there was an
informed, knowing acceptance of such limitations, and neither the
insurance company nor the insurance agent has any liability to the
insured for the insured's failure to purchase stackable coverage.
When the named insured, applicant, or lessee has initially accepted
such limitations, the acceptance applies to any policy which renews,
extends, changes, supersedes, reinstates or replaces an existing policy
unless the named insured requests deletion of the limitations and pays
the appropriate premium for the coverage.
(D) If an insured is entitled to uninsured motorist or
underinsured motorist coverage under more than one policy the
maximum amount the insured may recover may not exceed the
highest limit of such coverage provided for any one vehicle under
any one policy. If more than one policy applies, the following is the
order of priority:
(1) a policy covering a motor vehicle occupied by the injured
person at the time of the accident;
(2) a policy covering a motor vehicle not involved in the
accident under which the injured person is named insured;
(3) a policy covering a motor vehicle not involved in the
accident under which the injured person is an insured other than a
named insured. Coverage available under a lower priority policy
applies only to the extent it exceeds the coverage of a higher priority
policy. The underinsured motorist coverage does not apply to bodily
injury, sickness, or death of an insured while occupying a motor
vehicle owned by, furnished, or available for the regular use of the
insured, a resident spouse, or resident relative, if such motor vehicle
is not described in the policy under which a claim is made, or is not
a newly acquired or replacement vehicle covered under the terms of
the policy.
(E) Underinsured motorist Benefits
benefits paid pursuant to this section are not subject
to subrogation and assignment.
(F) No action may be brought under the underinsured
motorist provision unless copies of the pleadings in the action
establishing liability are served in the manner provided by law upon
the insurer writing the underinsured motorist provision. The insurer
has the right to appear and defend in the name of the underinsured
motorist in any action which may affect its liability and has thirty
days after service of process on it in which to appear. The evidence
of service upon the insurer may not be made a part of the record. In
the event the automobile insurance insurer for the putative at-fault
insured chooses to settle in part the claims against its insured by
payment of its applicable liability limits on behalf of its insured, the
underinsured motorist insurer may assume control of the defense of
action for its own benefit. No underinsured motorist policy may
contain a clause requiring the insurer's consent to settlement with the
at-fault party.
Insurers offering uninsured motorist coverage must file with the
director or his designee no more than ninety days after the effective
date of this act revised premium rates for this coverage to be effective
on all policies of automobile insurance containing such coverage
issued on or renewed with effective dates on or after October 1, 1998.
The revised rate must be approved by the director and reflect a
reduction in the currently approved premium rate for this coverage of
at least eighteen percent; provided, however, that after September 30,
1998, an insurer may apply to the director for a rate adjustment for
such coverage, based on its actual experience. In the first year
following such reductions, an insurer may apply to the director for a
rate adjustment, based on its actual experience, and include
consideration of the time value of money."
SECTION 9. Section 56-9-350 of the 1976 Code is amended to
read:
"Section 56-9-350. The operator or owner of a motor vehicle
involved in an accident resulting in property damage of four hundred
dollars or more or in bodily injury or death, must be furnished a
written request form at the time of the accident, or as soon after the
accident as possible, by the investigating officer for completion and
verification of liability insurance coverage, the form to be in a
manner prescribed by the Department.
The completed and verified form must be returned by the operator
or owner to the Department within fifteen days from the date the
form was delivered by the officer. Failure to return the form, verified
in the proper manner, is prima facie evidence that the vehicle was
uninsured.
The operator or owner of a motor vehicle involved in an accident
resulting in property damage of four hundred dollars or more, or in
bodily injury or death, which was not investigated by a law
enforcement officer shall furnish to the Department a written report
and verification of liability insurance coverage, the proof to be in a
manner prescribed by the Department within fifteen days
after the accident, shall forward a written report of the accident to the
department on a form prescribed by the department. The report must
contain information to enable the department to determine whether
the requirements for the deposit of security under Section 56-9-351
are inapplicable by reason of the existence of insurance or other
exceptions specified in this title. Failure to file the report, in the
proper verified manner, is prima facie evidence that the vehicle was
not registered in compliance with this title."
SECTION 10. Section 38-77-110(C) of the 1976 Code, as amended
by Act 148 of 1989, is further amended to read:
"(C) With regard to any coverage not required to be
written by an insurer under the mandate to write, no No
insurer, agent, or broker may refuse to write or
renew such policy, coverage, or endorsement of automobile
insurance because of the race, color, creed, religion, national
origin, or ancestry, location of residence in this State,
economic status, or income level of anyone who seeks to
become insured. However, nothing in this subsection may
preclude the use of a territorial plan approved by the director. If the
director of the Department of Insurance or the director's designee
may impose a fine up to two hundred thousand dollars. The director
or the director's designee at any time may examine an insurer, agent,
or broker to enforce this subsection."
SECTION 11. Section 38-77-110 of the 1976 Code, as last amended
by Section 803 of Act 181 of 1993, is further amended by adding:
"(D) An applicant denied coverage must be provided in
writing by the denying insurer the reason or reasons for which the
applicant has been refused insurance by that insurer, at the time of the
denial."
SECTION 12. Chapter 77 of Title 38 of the 1976 Code is amended
by adding:
"Article 13
Joint Underwriting Association
Section 38-77-1310. (A) The Reinsurance Facility is abolished
effective October 1, 1998. There is created the South Carolina Joint
Underwriting Association. The administration of the phase out of the
facility is transferred to the Joint Underwriting Association.
(B) As of July 1, 2001, the facility recoupment charge must not be
included in the rate or premium charged by the insurers of private
passenger automobile insurance to drivers who qualify for the safe
driver discount. If any losses are incurred as a result of the operation
of the facility, the losses attributable to the facility must be
distributed among insured drivers as provided in subsection (C) until
the Director of the Department of Insurance determines all of the
losses have been accounted for, unless provided otherwise.
(C) Consistent with subsection (B), the rate or premium charged
by insurers of private passenger automobile insurance must include
a recoupment charge, which must be added to the appropriate rate to
compensate for any remaining losses incurred by the facility as a
result of its operation. The operating losses of the facility for a
twelve-month period must be recouped in the subsequent
twelve-month period.
(1) Prior to December first of each year, the governing board
shall calculate the recoupment amount, by coverage, by dividing the
net facility operating loss, adjusted to reflect prudently incurred
expenses, consistent with the provisions of Section 38-73-465, and
the time value of money, by mandated coverage for the preceding
facility accounting year, by the total number of earned car years in
South Carolina, by coverage, for the same period of time. .368
multiplied by the recoupment is to be borne by risks having zero
surcharge points under the Uniform Merit Plan promulgated by the
director. The remainder of the recoupment (.614 multiplied by the
recoupment) represents R in the formula P1X +2P2X +3P3X + 4P4X
+ 5P5X + 6P6X + 7P7X + 8P8X + 9P9X + 10P10X = R. In this
formula to be utilized in determining the facility recoupment charge:
(a) P1 is the percentage of risks which have one surcharge
point under the Uniform Merit Rating Plan;
(b) P2 is the percentage of risks which have two surcharge
points under the Uniform Merit Rating Plan;
(c) P3 is the percentage of risks which are subject to a
surcharge of three points under the Uniform Merit Rating Plan;
(d) P4 is the percentage of risks which are subject to a
surcharge of four points under the Uniform Merit Rating Plan;
(e) P5 is the percentage of risks subject to a surcharge of five
points under the Uniform Merit Rating Plan;
(f) P6 is the percentage of risks subject to a surcharge of six
points under the Uniform Merit Rating Plan;
(g) P7 is the percentage of risks subject to a surcharge of
seven points under the Uniform Merit Rating Plan;
(h) P8 is the percentage of risks subject to a surcharge of
eight points under the Uniform Merit Rating Plan;
(i) P9 is the percentage of risks subject to a surcharge of nine
points under the Uniform Merit Rating Plan;
(j) P10 or more is the percentage of risks subject to a
surcharge of ten or more points under the Uniform Merit Rating Plan;
(k) X is the dollar amount by coverage, to be charged all risks
having one surcharge point under the Uniform Merit Rating Plan
promulgated by the director. This dollar amount, by coverage, is the
facility recoupment charge to be added to the rate for all risks which
have one surcharge point.
(2) The facility recoupment charge by coverage to be added to
the rate for all risks which have one surcharge point under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor
of one.
(3) The facility recoupment charge by coverage to be added to
the rate for all risks which have two surcharge points under the
Uniform Merit Rating Plan is calculated by multiplying X by a factor
of two.
(4) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of three points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of three.
(5) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of four points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of four.
(6) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of five points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of five.
(7) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of six points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of six.
(8) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of seven points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of seven.
(9) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of eight points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of eight.
(10) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of nine points
under the Uniform Merit Rating Plan is calculated by multiplying X
by a factor of nine.
(11) The facility recoupment charge by coverage to be added to
the rate for all risks which are subject to a surcharge of ten or more
points under the Uniform Merit Rating Plan is calculated by
multiplying X by a factor of ten.
(12) In determining the number of surcharge points a risk has for
the purposes of this section, no surcharge points assigned under the
Uniform Merit Rating Plan because the principal operator of the
automobile has not been licensed in any state for at least one year
immediately preceding the writing of the risk or as a result of a
failure of any motor vehicle equipment requirement may be
considered.
(13) This section applies to all private passenger automobile
insurance policies.
Section 38-77-1330. As used in this article:
(1) 'Association' means the South Carolina Joint Underwriting
Association established pursuant to this article.
(2) 'Net direct premiums' means gross direct premiums written on
automobile liability insurance as computed by the Director of the
Department of Insurance less return premiums or the unused or
unabsorbed portions of premium deposits.
Section 38-77-1340. (A) A joint underwriting association is
created consisting of all automobile insurers licensed to write within
this State automobile insurance policies. Every such insurer is and
must remain a member of the association as a condition of its
authority to continue to transact this kind of insurance in this State.
(B) The purpose of the association is to provide automobile
insurance on a self-supporting basis to the fullest extent possible.
Section 38-77-1350. The association has the power on behalf of its
members to make agreements among themselves with respect to the
equitable apportionment among them of insurance which may be
afforded applicants who are in good faith entitled to or have lost their
safe driver discount, but are unable to procure such insurance through
ordinary methods, and such insurers may agree among themselves on
the use of reasonable rate modifications for such insurance. Such
agreements and rate modifications shall be subject to the approval of
the department.
Section 38-77-1360. (A) The department shall, after consultation
with the insurers licensed to write automobile liability insurance in
this State, adopt a reasonable plan or plans for the equitable
apportionment among such insurers of applicants for such insurance
who are in good faith entitled to or have lost their safe driver
discount, but are unable to, procure such insurance through ordinary
methods, and, when such plan has been adopted, all such insurers
shall subscribe thereto and shall participate therein. Such plan or
plans shall include rules for classification of risks and rates therefor
by driver classification and territory. Any insured placed with the
plan shall be notified of the fact that insurance coverage is being
afforded through the plan and not through the private market, and
such notification shall be given in writing within ten days of such
placement. To assure that plan rates are made adequate to pay claims
and expenses, insurers shall develop a means of obtaining loss and
expense experience at least annually, and the plan shall file such
experience, when available, with the department in sufficient detail
to make a determination of rate adequacy.
(B) The plan of operation shall provide for economic, fair, and
nondiscriminatory administration and for the prompt and efficient
provision of insurance and may contain other provisions including,
but not limited to, preliminary assessment of all members for initial
expenses necessary to commence operations, establishment of
necessary facilities, management of the association, assessment of the
members to defray losses and expenses, commission arrangements,
reasonable and objective underwriting standards, appointment of
servicing carriers, and procedures for determining amounts of
insurance to be provided by the association.
(C) Trend factors shall not be found to be inappropriate if not in
excess of trend factors normally used in the development of residual
market rates by the appropriate licensed rating organization. Each
application for coverage in the plan shall include, in boldfaced
12-point type immediately preceding the applicant's signature, the
following statement:
'THIS INSURANCE IS BEING AFFORDED THROUGH THE
SOUTH CAROLINA JOINT UNDERWRITING ASSOCIATION
AND NOT THROUGH THE PRIVATE MARKET. PLEASE BE
ADVISED THAT COVERAGE WITH A PRIVATE INSURER
MAY BE AVAILABLE FROM ANOTHER AGENT AT A LOWER
COST. AGENT AND COMPANY LISTINGS ARE AVAILABLE
IN THE LOCAL YELLOW PAGES.'
(D) The plan of operation shall provide that any profit achieved by
the association must be added to the reserves of the association or
returned to the policyholders as a dividend but under no
circumstances whatsoever shall any profit be paid over to or received
by an insurer either in currency or any other benefit of any kind.
(E) Amendments to the plan of operation may be made by the
directors of the association with the approval of the director or must
be made at the direction of the director after proper notice and public
hearing.
(F) The association may not write private passenger automobile
insurance with higher limits of coverage than:
(1) two hundred fifty thousand dollars, for bodily injury liability
to one person in one accident,
(2) subject to the limit for one person, five hundred thousand
dollars because of bodily injury to two or more persons in one
accident,
(3) one hundred thousand dollars because of injury to or
destruction of property of others in any one accident,
(4) five hundred thousand dollars, combined single limits for
either or both bodily injury and property damage,
(5) two hundred fifty thousand dollars of added personal
protection benefits or personal protection liability limits up to the
limits of the personal protection benefits.
(G) If a driver covered by the association has not been able to
purchase insurance on the voluntary market after five consecutive
years of maintaining a safe driver discount, the driver must be placed
by the association with an automobile insurance company doing
business in the voluntary market in this State. The company must be
chosen based on its percentage of automobile insurance business
written in this State on the voluntary market. The company must
charge the driver the company's preferred or standard rate according
to driver classification and territory. A driver assigned under this
provision may not be refused insurance until the driver fails to
qualify for the safe driver discount. This provision does not preclude
the driver from seeking automobile insurance coverage on the
voluntary market at any other time.
Section 38-77-1370. The rates, rating plans, rating rules, rating
classifications, territories, and policy forms applicable to insurance
written by the association and the statistical and experience data
relating thereto are subject to this article and to those provisions of
Chapter 73 of Title 38 which are not inconsistent with this article.
Section 38-77-1380. The director or his designee shall obtain
complete statistical data in respect to automobile insurance losses and
reparation costs as well as all other costs or expenses which underlie
or are related to automobile insurance. The director shall promulgate
any statistical plan he considers necessary for the purpose of
gathering data referable to loss and loss adjustment expense
experience and other expense experience. When the statistical plan
is promulgated, the association shall adopt and use it.
Section 38-77-1390. In structuring rates and determining the profit
or loss of the association in respect to such insurance, consideration
must be given by the director to all investment income so that
investment income is a part of the ratemaking and ratesetting process.
Section 38-77-1395. No later than sixty days after the passage of
this act, the board must file with the director or his designee rates for
personal protection policies as defined by Section 38-78-30 and rates
for private passenger automobile insurance liability coverages,
uninsured motorist coverages, and underinsured motorist coverages.
All of these rates are subject to surcharges or discounts, if any,
applicable under any approved Merit Rating Plan, credit, or discount
plan promulgated or approved by the director. The board must file:
(1) a standard rate by driver classification and territory twenty
percent less than the substandard rate defined in (2). This rate applies
to all private passenger automobile insurance risks which qualify for
the safe driver discount and are insured directly by or ceded to the
association; and
(2) a 'substandard' rate by driver classification and territory which
applies to all private passenger automobile insurance risks which do
not qualify for the safe driver discount and are insured directly by or
ceded to the association.
These two rates must be construed so that when the experience
generated by them is combined, the association is able to provide
private passenger automobile insurance on a self-supporting basis.
Upon the approval of these rates, they must be utilized for all
private passenger automobile insurance risks either ceded to or
insured directly by the association. No insurer or group of insurers
under the same management may cede more than thirty-five percent
of total direct cedeable written premiums on South Carolina
automobile insurance as reported in the most recently filed annual
statement of the insurer or group. The association must submit policy
forms, rating plans, and rating rules applicable to insurance to be
written by the association to the director for his approval.
Section 38-77-1400. The premium rate charged for coverage must
be at rates established on an actuarially sound basis, including
consideration of trends in the frequency and severity of losses and
must be calculated to be self-supporting.
Section 38-77-1410. The association may provide a rate increase
or assessment subject to the director's approval.
Section 38-77-1420. Any deficit sustained by the association in
any year must be recouped, pursuant to the plan of operation and the
rating plan then in effect by a rate increase applicable prospectively.
The director has the authority to authorize and must approve any
recoupment under this section.
Section 38-77-1430. After the initial year of operation, rates, rating
plans, and rating rules and any provision for recoupment through
policyholder assessment or premium rate increase must be based
upon the association's loss and expense experience and investment
income, together with any other information based upon this
experience and income as the commissioner considers appropriate.
The resultant premium rates must be on an actuarially sound basis
and must be calculated to be self-supporting.
If sufficient funds are not available for the sound financial operation
of the association, pending recoupment as provided in Section
38-77-1420, all members, on a temporary basis, shall contribute to
the financial requirements of the association in the manner provided
for in Section 38-77-1440. Any such contribution must be
reimbursed to the members following recoupment as provided in
Section 38-77-1420.
Section 38-77-1440. All insurers which are members of the
association shall participate in its writings, expenses, and losses in the
proportion that the net direct premiums of each member, excluding
that portion of premiums attributable to the operation of the
association, written during the preceding calendar year bear to the
aggregate net direct premiums written in this State by all members of
the association. Each insurer's participation in the association must
be determined annually on the basis of the net direct premiums
written during the preceding calendar year, as reported in the annual
statements and other reports filed by the insurer with the director or
his designee. The assessment of a member insurer may after hearing
be ordered deferred in whole or in part upon application by the
insurer if, in the opinion of the director, payment of the assessment
would render the insurer insolvent or in danger of insolvency or
would otherwise leave the insurer in such condition that further
transaction of the insurer's business would be hazardous to its
policyholders, creditors, members, subscribers, stockholders, or the
public. In the event that payment of an assessment against a member
insurer is deferred by order of the director in whole or in part, the
amount by which the assessment is deferred must be assessed against
other member insurers in the same manner as provided in this section.
In its order of deferral, or in such subsequent orders as may be
necessary, the director shall prescribe a plan by which the assessment
so deferred must be repaid to the association by the impaired insurer
with interest at the six-month treasury bill rate adjusted semiannually.
Any profits, dividends, or other funds of the association to which the
insurer is otherwise entitled may not be distributed to the impaired
insurer but must be applied toward repayment of any assessment until
the obligation has been satisfied. The association shall distribute the
repayments, including any interest thereon, to the other member
insurers on the basis at which assessments were made.
Section 38-77-1450. Every member of the association is bound by
the approved plan of operation of the association and the rules of the
board of directors of the association.
Section 38-77-1460. (A) If the authority of an insurer to transact
automobile insurance in this State terminates for any reason, its
obligations as a member of the association continue until all its
obligations are fulfilled and the director has so found and certified to
the board of directors.
(B) If a member insurer merges into or consolidates with another
insurer authorized to transact insurance in this State or another
insurer authorized to transact insurance in this State has reinsured the
insurer's entire automobile insurance business in this State, both the
insurer and its successor or assuming reinsurer, as the case may be,
are liable for the insurer's obligations to the association.
(C) Any unsatisfied net liability of any insolvent member of the
association must be assumed by and apportioned among the
remaining members in the same manner in which assessments or gain
and loss are apportioned and the association shall acquire and have
all rights and remedies allowed by law in behalf of the remaining
members against the estate or funds of the insolvent insurer for funds
due the association.
Section 38-77-1470. The joint underwriting association is
governed by a board of seven directors, one of whom is appointed by
the Governor to represent the general public and four of whom are
appointed by the Governor and represent automobile insurers who are
members of the association. Two directors, appointed by the
Governor, must be agents authorized to represent automobile insurers
licensed to do business in this State.
The approved plan of operation of the association may make
provision for combining insurers under common ownership or
management into groups for voting, assessment, and all other
purposes and may provide that not more than one of the officers or
employees of such a group may serve as a director at any one time.
The board of directors shall elect a chairman by majority vote and he,
or his designee, must preside at all meetings of the board.
Section 38-77-1480. Any applicant for insurance through the
association or any insurer adversely affected, or claiming to be
adversely affected, by any ruling, action, or decision by or on behalf
of the association, may appeal to the Director of the Department of
Insurance within thirty days after the ruling, action, or decision.
Section 38-77-1490. The association shall file with the director or
his designee annually by March first a statement containing
information with respect to its transactions, condition, operations, and
affairs during the preceding year. The statement shall contain
information prescribed by the director and must be in the form he
directs.
The director, at any reasonable time, may require the association to
furnish additional information concerning its transactions, condition,
or any matter connected therewith considered to be material and of
assistance in evaluating the scope, operations, and experience of the
association.
Section 38-77-1500. The Director of the Department of Insurance
or his designee shall make an examination into the financial condition
and affairs of the association at least annually and shall file a report
thereon with the Governor and the General Assembly. The expenses
of the examination must be paid by the association."
SECTION 13. Section 38-73-455 of the 1976 Code, as last amended
by Section 61 of Act 459 of 1996, is further amended to read:
"Section 38-73-455. (A) An automobile insurer
shall offer two four different rates for automobile
insurance, a base rate as defined in Section 38-73-457 and an
objective standards rate which is twenty-five percent above the base
rate. Both All of these rates are subject to all
surcharges or discounts, if any, applicable under any approved merit
rating plan, credit, or discount plan promulgated by the
department or approved by the director or his designee.
(B) No later than ninety days after the passage of this act,
insurers of automobile insurance must file with the director or his
designee rates for personal protection policies as defined by Section
38-78-30 and revised rates for all other private passenger automobile
insurance policies written by them. Each insurer must file:
(1) a 'preferred' rate by driver classification and territory,
which is a rate less than the standard rate defined herein. This rate
applies to private passenger automobile insurance risks which qualify
for the safe driver discount; and
(2) a 'standard' rate which must be the approved base rate
as defined in Section 38-73-457, by driver classification and territory
in effect on July 1, 1998. This rate applies to private passenger
automobile insurance risks which qualify for the safe driver discount;
and
(3) a 'nonpreferred' rate by driver classification and
territory, which is a rate more than the standard rate but less than the
rate by driver classification and territory for the substandard rate and
is applicable to all private passenger automobile insurance risks; and
(4) a 'substandard' rate by driver classification and territory,
which is a rate more than the nonpreferred rate but less than or equal
to the substandard rate by driver classification and territory for the
South Carolina Joint Underwriting Association, as provided for in
Article 13 of Chapter 77 of Title 38, and is applicable to all private
passenger automobile risks.
(C) The director must approve the rates filed pursuant to
subsection (A). If the rates are approved, the rates shall become
effective for all policies of automobile insurance issued or renewed
with effective dates on or after October 1, 1998.
(D) Insurers may place any automobile insurance risk at any
of the four rate levels without restriction unless provided otherwise
in this chapter. An insurer or agent shall provide written notice to the
insurer of the tier at which coverage is being written for the insured
and the reasons the insured was written in that particular tier.
However, the Uniform Merit Rating Plan must continue to apply to
all risks written by them.
(E) An applicant and all operators of the insured automobile
who have qualified for the safe driver discount for the last five years
and who reside in the same household, and the automobile or the
automobile it replaced has been insured for liability or personal
protection coverage for the past twelve months must be written at the
preferred or standard rate and may not be ceded to the Joint
Underwriting Association. A driver who is claimed as a dependent
for income tax purposes is not required to meet the five-year
requirement as long as the dependent qualifies for the safe driver
discount.
(F) An applicant and all operators of the insured automobile who
have qualified for the safe driver discount for the last ten years and
who reside in the same household and the automobile or the
automobile it replaced has been insured for liability or personal
protection coverage for the past twelve months must be written at the
preferred rate and may not be ceded to the Joint Underwriting
Association. A driver who is claimed as a dependent for income tax
purposes is not required to meet the ten-year requirement as long as
the dependent qualifies for the safe driver discount.
(G) All policies of automobile insurance issued or renewed
with effective dates on or after October 1, 1998, that are written by
automobile insurers designated pursuant to Section 38-77-590(A), for
risks written by them through producers designated pursuant to that
same section, and all policies ceded to the Joint Underwriting
Association by automobile insurers must be written at the rates
provided for in Section 38-77-1395. However, the Uniform Merit
Rating Plan must apply to all such risks.
(H) The Board of Directors of the association must file rates
by driver classification and territory for both the personal protection
policies as defined by Section 38-78-30, liability coverages, and
uninsured motorist coverage.
Applicants, or a current policyholder, seeking automobile
insurance with an insurer must be written at the base rate, unless one
of the conditions or factors in subitems (1) through (8) of item (A) is
present.
(A) The named insured or any operator who is not excluded in
accordance with Section 37-77-340 and who resides in the same
household or customarily operates an automobile insured under the
same policy, individually:
(1) has obtained a policy of automobile insurance or
continuation thereof through material misrepresentation within the
preceding thirty-six months; or
(2) has had convictions for driving violations on three or more
separate occasions within the thirty-six months immediately
preceding the effective date of coverage as reflected by the motor
ehicle record of each insured driver as maintained by the Department
of Public Safety; or
(3) has had two or more 'chargeable' accidents within the
thirty-six months immediately preceding the effective date of
coverage. A 'chargeable' accident is defined as one resulting in
bodily injury to any person in excess of three hundred dollars per
person, death, or damage to the property of the insured or other
person in excess of seven hundred fifty dollars. Accidents occurring
under the circumstances enumerated below are not considered
chargeable.
(a) The automobile was lawfully parked. An automobile
rolling from a parked position is not considered as lawfully parked
but is considered as operated by the last operator.
(b) The applicant or other operator or owner was reimbursed
by or on behalf of a person responsible for the accident or has a
judgment against this person.
(c) The automobile of an applicant or other operator was
struck in the rear by another vehicle and the applicant or other
operator has not been convicted of a moving traffic violation in
connection with the accident.
(d) The operator of the other automobile involved in the
accident was convicted of a moving traffic violation and the applicant
or other operator was not convicted of a moving traffic violation in
connection therewith.
(e) An automobile operated by the applicant or other operator
is damaged as a result of contact with a 'hit and run' driver, if the
applicant or other operator so reports the accident to the proper
authority within twenty-four hours or, if the person is injured, as soon
as the person is physically able to do so.
(f) Accidents involving damage by contact with animals or
fowl.
(g) Accidents involving physical damage, limited to an
caused by flying gravel, missiles, or falling objects.
(h) Accidents occurring as a result of the operation of any
automobile in response to an emergency if the operator at the time of
the accident was responding to a call of duty as a paid or volunteer
member of any police or fire department, first aid squad, or any law
enforcement agency. This exception does not include an accident
occurring after the emergency situation ceases or after the private
passenger motor vehicle ceases to be used in response to the
emergency; or
(4) has had one 'chargeable' accident and two convictions for
driving violations, all occurring on separate occasions, within the
thirty-six months immediately preceding the effective date of
coverage as reflected by the motor vehicle record of each insured
driver as maintained by the Department of Public Safety; or
(5) has been convicted of or forfeited bail during the thirty-six
months immediately preceding the effective date of coverage for
operating a motor vehicle while in an intoxicated condition or while
under the influence of drugs; or
(6) has been convicted or forfeited bail during the thirty-six
months immediately preceding the effective date for:
(a) any felony involving the use of a motor vehicle;
(b) criminal negligence resulting in death, homicide, or
assault arising out of the operation of a motor vehicle;
(c) leaving the scene of an accident without stopping to
report;
(d) theft or unlawful taking of a motor vehicle;
(e) operating during a period of revocation or suspension of
registration or license;
(f) Knowingly permitting an unlicensed person to drive;
(g) reckless driving;
(h) the making of material false statements in the application
for licenses or registration;
(i) impersonating an applicant for license or registration or
procuring a license or registration through impersonation, whether for
himself or another;
(j) filing of a false or fraudulent claim or knowingly aiding
or abetting another in the presentation of such a claim;
(k) failure to stop a motor vehicle when signaled by means or
a siren or flashing light by a law enforcement vehicle; or
(7) has for thirty or more consecutive days during the twelve
months immediately preceding the effective date of coverage, owned
or operated the automobile to be insured (or if newly acquired, the
automobile it replaces) without liability coverage in violation of the
laws of this State; or
(8) has used the insured automobile as follows or if the insured
automobile is:
(a) used in carrying passengers for hire or compensation,
except that the use of an automobile for a car pool must not be
considered use of an automobile for hire or compensation;
(b) used in the business of transportation of flammables or
explosives;
(c) used in illegal operation; or
(d) no longer principally used and garaged within the State,
but not to include students who are operating a motor vehicle
registered in this State while attending an institution located in
another state.
(B) In the event that one or more of the conditions or factors
prescribed in items (1) through (8) of subsection (A) exist, the motor
vehicle customarily operated by that individual must be written at the
objective standards rate.
(C) (I) Member companies of an affiliated group of
automobile insurers may not utilize different filed rates for
automobile insurance coverages which they are mandated by law
to write. For the purpose of this section, an affiliated group of
automobile insurers includes a group of automobile insurers under
common ownership, management, or control. Those automobile
insurers designated pursuant to Section 38-77-590(a), for automobile
insurance risks written by them through producers designated by the
facility governing board pursuant to that section, shall utilize the rates
or premium charges by coverage filed and authorized for use by the
rating organization licensed by the director or his designee pursuant
to Article 11, Chapter 73 of this title, which has the largest number
of members or subscribers for automobile insurance rates. However,
those automobile insurers designated pursuant to Section
38-77-590(a) are not required to use those same rates or premium
charges described in the preceding sentence for risks written by them
through their authorized agents not appointed pursuant to Section
38-77-590.
(D) (J) An automobile insurance policy may be
endorsed at any time during the policy period to reflect the correct
rate or premium applicable by reason of the factors or conditions
described in subsection (A) which existed prior to the commencement
of the policy period in which the endorsement is made, regardless of
whether the factors or conditions were known or disclosed to the
insurer at the commencement of the policy period. However, no
No policy may be endorsed during a policy period to reflect
factors or conditions occurring during that policy period. A policy
may be endorsed during a policy period to recognize the addition or
deletion of an operator or vehicle.
(E) For purposes of determining the applicable rates to be
charged an insured, an automobile insurer shall obtain and review an
applicant's motor vehicle record."
SECTION 14. Section 56-10-270 of the 1976 Code is amended to
read:
"Section 56-10-270. (a) Any person knowingly operating an
uninsured motor vehicle subject to registration in this State or any
person knowingly allowing the operation of an uninsured motor
vehicle subject to registration in this State is guilty of a misdemeanor
and, upon conviction, must be punished as follows:
(1) for a first offense, fined not less than one
two hundred dollars nor more than two three
hundred dollars or imprisoned for thirty days or may be ordered
to perform up to fifty public service hours, or a combination of
these, and,
(2) upon conviction of a second offense, be fined
two three hundred dollars or imprisoned for thirty
days or perform up to one hundred public service hours, or a
combination of these, or both, and
(3) for a third and subsequent offenses must be
imprisoned for not less than forty-five days nor more than six months
and be fined up to four hundred dollars or serve up to two
hundred public service hours, or a combination of these. Only
convictions which occurred within five years including and
immediately preceding the date of the last conviction constitute prior
convictions within the meaning of this section. An uninsured motor
vehicle includes an insured vehicle with respect to which the operator
has been excluded from coverage pursuant to the provisions of
Section 38-77-340.
(b) The department upon receipt of information to the effect that
any person has been convicted of violating subsection (a) of this
section shall suspend the driving privilege and all license plates and
registration certificates issued in the person's name for a period of
thirty days for a first offense, for a period of ninety days for a
second offense, and for a period of six months for a third and each
subsequent offense. and may not reinstate that
The person's privileges may not be reinstated until
proof of financial responsibility has been filed.
(c) Any person whose license plates and registration certificates
which are suspended as provided in this section, which are not
suspended for any other reason, may have them immediately restored,
if he files proof of financial responsibility with the
department."
SECTION 15. The 1976 Code is amended by adding:
"Section 38-77-116. Upon issuance of a new private
passenger automobile insurance policy, the insurance company or
agent must review with the new applicant a list of driving offenses
and the related fine and punishment, as well as the possible increase
in the rates, the effect of any surcharges, or the effect of the loss of
the safe driver discount. This list must be on a form approved by the
Director of the Department of Insurance and must accompany the
policy."
SECTION 16. After September 30, 1998, the governing board of
the Joint Underwriting Association, enacted pursuant to Article 13 of
Chapter 77 of Title 38 of the 1976 Code as contained in this act, shall
contract with one or more insurers or business entities to serve as the
designated carrier and shall establish a procedure for the selection of
the designated carrier. In developing this procedure, the board must
establish criteria which will assure the designated carrier's ability to
adequately provide policy-writing and claims service. However, the
board may not require that the designated carrier be a licensed
insurance company. Designated carrier contracts must be for a period
of three years and must be awarded upon the terms and conditions for
competitive sealed bidding as provided in Section 11-35-1520 of the
1976 Code.
If the designated carrier fails two claims audits, including a re-audit,
within the contract term, the designated carrier is disqualified for
renewal of its contract with the facility upon expiration of its existing
contract. Designated carrier contracts awarded pursuant to this
section must provide that the failure of two claims audits, including
a re-audit, during the contract term constitutes a material breach of
the contract. After July 1, 1998, the governing board of the
association may not designate any new producers.
Commissions paid to agents for policies ceded to or placed in the
Joint Underwriting Association must be set by the association's board
of directors.
SECTION 17. Section 38-77-111 of the 1976 Code, as added by
Act 148 of 1989, is amended to read:
"Section 38-77-111. An automobile insurer may cede the
coverages of an automobile insurance policy that it is mandated to
write to the Reinsurance Facility Joint Underwriting
Association but it may not cede coverages under a policy that it
is not mandated by law to write except for tort liability and
personal protection coverages and uninsured motorist coverage for
those risks that do not qualify for the safe driver discount.
However, if an insurer cedes a coverage it is mandated to write by
law, it shall cede all coverages under that policy that it is mandated
to write."
SECTION 18. Article 5 of Chapter 77 of Title 38 of the 1976 Code
and Sections 38-73-1420, 38-73-1425, 38-77-285, 38-77-920,
38-77-940, 38-77-950, and 38-77-960 are repealed on October 1,
1998.
SECTION 19. If any provision of this act or the application thereof
to any person or circumstance is held to be unconstitutional or
otherwise invalid, the remainder of this act and the application of
such provision to other persons or circumstances are not affected
thereby, and it is to be conclusively presumed that the General
Assembly would have enacted the remainder of this act without such
invalid or unconstitutional provision, except that if Section 38-78-110
or Section 38-78-120 is found to be unconstitutional or invalid it is
to be conclusively presumed that the General Assembly would not
have enacted the remainder of this act without such limitations, and
the entire act is invalid. If Section 38-78-110 is found to be
unconstitutional or invalid, personal protection insurers have no
obligation to pay personal protection benefits with respect to
accidents occurring on or after the date of the finding of such
unconstitutionality or invalidity and, in addition, are subrogated to all
of the rights of personal protection insureds for all previous such
benefits paid.
SECTION 20. Except as otherwise specifically provided herein, this
act takes effect upon approval by the Governor.
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