Consumers would be less apt to buy auto insurance if there was a chance the company would suddenly go belly-up and they could be suddenly stuck with no protection after having diligently paid their bills.
To provide consumers with greater security, the non-profit South Carolina Property and Casualty Insurance Guaranty Association steps in when insurers become insolvent. It won’t cover every company or type of claim, but it was established by the legislature to offer coverage in cases providers of auto, workers’ compensation, homeowners’ or other property and casualty lines become insolvent.
So if you are injured and the other driver’s insurance company is insolvent, the SCPCIGA will cover up to $300,000 for bodily injury and property damage under a covered claim. (Plus, injured parties can also seek recompense through their own underinsured motorist plan.)
Our Spartanburg auto accident attorneys know that this happens more often than you might think. Just recently, the South Carolina Department of Insurance announced commercial auto insurer First Keystone Risk Retention Group Inc. was insolvent. The company, which mostly insured taxis and commercial trucks, had 800 pending claims.
When a crash victim seeks compensation from the SCPCIGA, it is similar to submission of a claim to a regular insurer in that there is no guarantee the claim will be approved and, in fact, the organization has a vested interest in reducing liability. That means you will need an experienced crash lawyer by your side through what can be a somewhat confusing and arduous process.
The South Carolina Supreme Court recently weighed one such case: SC Property v. Brock.
Here, the state high court ruled that statutory language governing solvent insurer set-offs is not ambiguous, and the agency is entitle to offset all payments by solvent insurers to an injury victim.
According to court records, plaintiff was a passenger in a vehicle that was involved in a crash with a logging truck. (Both drivers were later found to be equally at-fault.) At the time of the crash, the logging truck driver was insured through his employer’s carrier, Aequicap Insurance Company. Plaintiff sustained severe injuries as a result of the wreck, and he filed a personal injury lawsuit shortly after that.
Shortly after the litigation process started, plaintiff settled all claims against the logging truck driver and his employer through the Aequicap, which agreed to pay $185,000 for the release of all claims.
But before the insurance company could pay out a single dime, the firm was declared insolvent. Because the insurer was licensed in South Carolina and the company was based in South Carolina, the claim was referred to the SCPCIGA. Plaintiff made a request for the full settlement amount.
Prior to this, plaintiff had received $22,500 from the other driver’s liability insurance, $41,000 from his private pay medical insurance carrier, $25,000 from his parent’s uninsured motorist coverage (as a resident relative) and $5,000 in personal injury protection (again from his parent’s plan). That gave him a total of $93,100.
The state insurance guarantee association argued it was entitled to an offset of this amount, meaning it should only have to pay $91,900 – not $185,000. The agency paid this amount, but plaintiff argued he was entitled to the rest. He argued this was not duplicative recovery.
The circuit court found the language governing this issue ambiguous. It ruled the state insurer could offset the amount paid by plaintiff’s parent’s plan, but not the amount paid by the other driver’s insurer or plaintiff’s medical insurer. Court ordered the agency to pay another $63,100.
That ruling was appealed to the South Carolina Supreme Court, which reversed. The circuit court (and plaintiff) relied heavily on the collateral source rule, which indicates a tortfeasor has no right to mitigation of damages because of other payment or compensation paid by another party from a source totally independent of the wrongdoer. However, the non-profit insurance guaranty is not a wrongdoer or insurer of wrongder, but rather a statutory entity that exists to provide some level of protection for insureds of insolvent insurance firms. Therefore, the state high court found, allowing an offset is not creating a benefit to a tortfeasor.
Contact the South Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
SC Property v. Brock, Oct. 29, 2014, South Carolina Supreme Court
More Blog Entries:
Bolding v. Kindel Concrete – Proving Causation is Critical to Case, Nov. 1, 2014, Spartanburg Truck Accident Lawyer Blog