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TIPS: a Torts, Insurance and Products Blog

Weekly insights and updates from Nexsen Pruet's TIPS attorneys


Editor: Cheryl D. Shoun

The South Carolina Court of Appeals recently provided a general yet thorough overview of the court’s perspective as to arbitration agreements, with a focus on such agreements in light of authority granted pursuant to a power of attorney. Thayer W. Arredondo, as Personal Representative of the Estate of Hubert Whaley v. SNH SE Ashley River Tenant, LLC, et al., 2019 WL 3814725 (August 14, 2019).[1]

S.C. Code Ann. Section 38-77-160 serves to establish an insurer’s duty to offer, at the option of an insured, underinsured motorist coverage (“UIM”) up to the limits of the insured liability coverage, in order to provide coverage should the insured suffer damages in excess of the liability coverage of an at-fault or underinsured driver or in excess of any damages limitation imposed by statute. If, however, an insurer fails to make a meaningful offer of UIM coverage, as required, the policy will be reformed by operation of law, to provide UIM coverage in accordance with the applicable statute.[1] An insurer is not required to make a new offer of UIM coverage, however, on any policy that renews, extends, changes, supersedes, or replaces an existing policy. S.C. Code Ann. Section 38-77-250(C). Thus, the question – what is a “change” such that an insurer is excused from the requirement of making a new offer of UIM coverage. The Supreme Court offered guidance in the recent case of Progressive Direct Insurance Company v. Bryan Reeves, 2019 WL 3310487 (July 24, 2019), in which it addressed a certified question from the United States District Court for the District of South Carolina.

South Carolina’s courts have long and consistently articulated that insurance policies are contracts, governed by the general rules of contract construction. Our courts have just as consistently held that insurers may include conditions in policies as long as they do not run afoul of public policy or are not violative of the law. Among allowable conditions are notice clauses, commonly found in insurance policies and grounded in the logic that an insurer must have notice of a claim in order to undertake investigation and defense thereof. Notwithstanding the evident purpose of notice and cooperation clauses, they have been the subject of more than a century of litigation. The trend continued with Neumayer v. Philadelphia Indemnity Insurance Company, et al., 2019 WL 3310474 (July 24, 2019). Neumayer presented the South Carolina Supreme Court with the novel argument that S.C. Code §38-77-142(C) abrogates notice and cooperation clauses included in insurance policies.