SC Insurance

Majority Rule- to avoid the policy insurer must show:

1. The falsity of the statement challenged
2. The falsity was known to the applicant
3. It was material to the risk (would have actually increased risk of loss/change in premiums)
4. It was made with the intent to defraud the insurer
5. It was relied upon by the insurer in issuing the policy
Also need causal connection

1. The falsity of the statement challenged
2. The falsity was known to the applicant
3. It was material to the risk
4. The carrier relied on the statements
5. They were made with the intent to deceive and defraud the company; and
6. The insurer must challenge the truthfulness of the application during the first 2 years of the policy or during the life of the insured

Must be specifically excluded

Insurer most show causal connection between loss and exclusion before exclusion will limit coverage

the internal inconsistency created by an exclusion which purports to bar coverage for claims arising out of the very operations sought to be insured renders the policy ambigous and ct must resolve the ambiguity in favor of the insured (isle of palms)

Insurer will not pay for loss unless it's fortuitous

For a liability exclusion to apply, South Carolina uses the Miller Test:

Insured must have the specific intent to injure AND cause the particular type of injury suffered.

1st prong: whether act causing loss intentional

2nd prong: whether results of act intentional

An insurer may NOT use the intentional act exclusion to exclude coverage to its insured where te nisured can show his acts were in self-defense

Apply Miller Test still

An insurer has a duty to defend a named insured only if the facts in a complaint against the Insured bring the claim within the policy coverage even if false, groundless or fraudulent

1. Declaratory Action
2. Nonwaiver Agreement
3. Reservation of Rights Notices
4. Set-Off Benefits (but not worker's comp)

Insurer has NO duty to advise the insured, but if an Agent nevertheless does he must exercise due care.

Agent may expressly or impliedly assume the duty of care.

Acts of agents may bind insurer under the doctrine of apparant authority

An implied undertaking will be shown and imputed to insurer if:
1. The agent received consideration beyond mere payment of the premium;
2. The insured made a clear request for advice; or
3. There is a course of dealing which would put an objectively reasonable agent on notice that his advice is being sought and relied on.

Generally insured may NOT complain of fraud in the misrepresentation of the contents of the policy when the truth could have been ascertained by reading the instrument
Exception: When the Insured is dealing with the Insured’s own Insurance Agent and inquires as to the specific terms / provisions of the policy, and reasonably relied upon the Agent, the Insurer MAY be liable for loss even if the actual written language of the policy excluded the coverage which the Agent alleged the policy provided

The person whose loss triggers the insurer's duty to pay proceeds

determines who must be insured in an insurance policy

Class I: The named insured, resident spouse and relatives residing in household.

Class II: All other permissive users or guests.

1. Hell or High Water
2. Minor Deviation
3. Coversion Rule (SC): the vehicle must be used within the scope of permission granted- no deviation permitted!

1. Insured is under a duty to inform insurer of a potential liability claim and to forward suit papers.
2.An insurer must show it was prejudiced as a result of the lack of cooperation.
3.Even upon such a showing, public policy weighs heavily upon a finding of coverage, in order to protect injured third parties:

ex. Injured 3P sues insured. Insured gives no notice or papers to insurer for over 6 years. 3P obtains default judgment. SC Courts say insurer still must pay because they are in the better position to pay the innocent 3P. However, liable only up to minimum limits.

An injury arises out of the ownership, maintenance, or use of an automobile if:

• Test (Howser)
(1) There is a causal connection between the vehicle and the injury

a. Vehicle MUST be an active accessory to the assault

b. There MUST be something less than proximate cause and more than the vehicle merely being the site of the injury;

c. The injury MUST be forseeably identifiable with the normal use of the motor vehicle as a motor vehicle

(2) The vehicle MUST have been used for transportation at the time of the accident; AND

(3)No act of independent significance occurred which broke the causal link;

An accident resulting in personal injury or property damage that is neither intended nor expected from the standpoint of the insured.

1. Continuous Trigger
2. Exposure Theory
3. Manifestation Theory
4. Continous Trigger/Injury-in-Fact

For limited instances such as environmental cases & hazerdous waste, SC uses:
Manifestation Theory- when did the problem actually show itself?
Loss is only covered if there was coverage when the loss manifested itself, regardless of whether the cause of the loss occured long before?

Continous Trigger/Cause-in-Fact Hybrid:

Applies where damages are progressive.

Coverage is triggered at the time injury-causing event occured and continuosly thereafter.

Rule: In SC, an insurer is liable for activity amounting to bad faith, fraud or negligence.

P must be willing to settle within policy limits

Tyger River:
Implied duty of good faith and fair dealing.
An insurer has a duty to settle personal injury claims IF settlement is the reasonable thing to do.

Determine bad faith by considering these factors:
i.Strength of claim;
ii.Insurer’s rejection of advice from its attorney;
iii.Failure to investigate;
iv.Failure to inform insured of compromise offer;
v.Fault of insured in inducing insurer’s rejection of compromise by misleading the facts;
vi.Attempts to induce insured to contribute to a settlement;
vii.Amount of financial risk;
viii.Any other factors establishing or negating the insurer’s bad faith

An insurer negligently failing to settle the case against the insured is liable for the loss even in the absence of bad faith or fraud

Majority View- failure to exercise good faith in deciding whether or not to pay a claim is a breach of the implied duty of good faith and fair dealing and therefore is actionable in tort.

If the breach is willful or reckless, the claim sounds in tort.

If the breach is without reason or in bad faith, the claim sounds in contract.

1. Existence of a Contract
2. Refusal by insurer to pay benefits due under the contract
3. resulting from insurer's bad faith or unreasonable action in breach of implied covenant of good faith/fair dealing and
4. causing damage to the insured

(1) Ins. K between the parties AND breach by ∆ (insurer)
(2) Intentional refusal to pay claim
(3) NO arguable reason for refusal
(4) Insurer’s actual knowledge of absence of arguable reason
(5) Insurer’s intentional failure to determine legitimate/ arguable reason to refuse to pay the claim

**Anyone has an insurable interest in property who derives a benefit from its existence OR would suffer a loss from its destruction.**

Must exist in the property to be insured & can be legal or equitable.

Examples:

If life- must exist at the time the K is made

In property- must exist at time claim is made and terminates when all underlying interests terminate!

set 1/1/07 = 25/50/25

1. Insurer provides Insured w/a premium renewal notice that refers to "underinsured" and "uninsured" motor vehicle coverage AND
2. Includes an insert explaining the terms

Wannamaker Test:
1. Notification must be commercially reasonable, whether oral or in writing;
2. Insurer must specify the limits of optional coverage and not merely offer additional coverage;
3. Insurer must intelligibly advise the insured of the nature of the optional coverage; and
4. The insured must be told that optional coverages are available for an additional premium.

If the insurer fails to make a meaningful offer, the policy will be reformed to include UIM coverage up to the limits of liability insurance carried by the insured

If causes injury to insured but is unknown the insured can NOT recover UM coverage UNLESS:
1. Insured or someone of his behalf reported the accident to the police within a reasonable time;
2. injury/damage was caused by physical contact w/unknown vehicle OR the accident MUST have been witnessed by someone other than the owner/operator of insured vehicle who signs an affidavit attesting truthfulness and
3. Insured was NOT negligent in failing to determine the identity of the other vehicle or its driver at the time of the accident

Stacking is an insured's recovery of damages under more than 1 policy in succession until all damages are satisfied or until the total limits or all policies have been exhausted.