Insurance – Auto – UIM – Parents’ Vehicles – Separate Policy – Exclusion

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Carter v. Standard Fire Insurance Co. (Lawyers Weekly No. 010-146-13, 16 pp.) (Jean Hoefer Toal, Ch.J.) (Costa M. Pleicones, J., joined by John W. Kittredge, J., dissenting) Appealed from Williamsburg County Circuit Court (Clifton Newman, J.) On writ of certiorari to the Court of Appeals. S.C. S. Ct.

http://www.sccourts.org/opinions/HTMLFiles/SC/27340.pdf

Holding: A son who lived with his parents and was injured while a passenger in his own car – which he owned with his mother but insured with a different insurance company than the company that insured his parents’ three cars – may stack the underinsured motorist coverage from his parents’ policy onto the UIM coverage from his policy, despite an exclusion in the parents’ policy.

We affirm the Court of Appeals’ decision, which reversed summary judgment for the defendant-insurer.

Both the son, Michael, and his parents had $250,000 in UIM coverage on their vehicles. Michael was paralyzed as a result of the accident.

The parents’ policy has an exclusion that reads, “A. We do not provide [UIM] for ‘bodily injury’ or ‘property damage’ sustained by any person: 1. While ‘occupying’ … any motor vehicle owned by you or any ‘family member’ which is not insured for this coverage under this policy….”

An insurer cannot contractually limit coverage in contravention of S.C. Code Ann. § 38-77-160. The statute unequivocally states that once the insured “is protected by … UIM coverage in excess of the basic limits,” the insurer “shall provide” UIM coverage up to the amount held on the vehicle involved in the accident. Because the exclusion in question conflicts with this clear language, we hold the exclusion is void.

South Carolina courts have interpreted § 38–77–160 to allow Class I insureds, like Michael, to stack UIM coverage from multiple automobile insurance policies. This is so because UIM coverage is considered to be both “personal and portable.” Thus, a Class I insured typically may pursue stacking whether or not he was injured in his vehicle.

However, the amount an insured is permitted to stack from at-home policies is limited to the amount of UIM carried on the vehicle involved in the accident.

Burgess v. Nationwide Mutual Insurance Co., 373 S.C. 37, 644 S.E.2d 40 (2007), did not involve stacking. For this reason, Burgess did not involve § 38-77-160, and this court did not interpret that section or touch on any of our precedents interpreting that section.

Because Michael, a Class I insured under the defendant’s policy, purchased UIM coverage on the vehicle involved in the accident, the statute requires that he be permitted to stack UIM coverages on the at-home vehicles.

To allow the exclusion here would be to permit the insurance company, in the better position to assess risk because it can account for a resident relative in setting premiums, to hinder competition and increase insurance premiums by limiting coverage for a Class I insured to a single policy, meaning the Class I insured could only purchase excess UIM coverage on all of his vehicles on the insurer’s terms. We find this result undesirable, and more importantly, one not intended by the legislature under the clear language of § 38-77-160.

Affirmed.

Dissent

(Pleicones, J.) While § 38-77-160 requires an insurance company to offer UIM coverage, the decision to purchase such coverage is voluntary; therefore, the UIM exclusion at issue does not involve “statutorily mandated coverage” since it is only the offer of such coverage that is required by § 38-177-160.

Since UIM coverage is not mandatory, and since limitations on portability are permissible under the “If, however” clause of § 38-77-160, Burgess held a policy could lawfully eliminate the portability of UIM coverage when the named insured is involved in an accident while in a vehicle he owns but does not insure under the policy.

An insured who is not the owner of the policy is bound by the UIM portability decisions made by the policy owner, a result that the General Assembly mandated in § 38-77-160.

Section 38-77-160 provides in the “If, however” clause that where an insured “is protected by [UIM coverage], the policy shall provide he is protected only to the extent of the coverage he has on the vehicle involved in the accident.” In my view, the defendant-insurer’s exclusion is consistent with this clause: while Michael was entitled to the “personal and portable” UIM coverage in his parents’ policy because he was an insured, that policy, consistent with the “If, however” clause of § 38-77-160, limited Michael’s UIM coverage to the amount bought “on the vehicle involved in the accident.” Here, the parents’ policy provided no UIM coverage on the involved vehicle since the car was not insured under that policy. I see nothing in the exclusion that violates either public policy or the language of § 38-77-160.