Does an Out of State Insurance Policy Cover a Car Accident in SC?

If you are in a car accident in Myrtle Beach or Conway, SC, but you have an out-of-state insurance policy that was purchased in another state, your insurance policy should cover the damages from the wreck.

If the car accident happened in SC, SC law determines liability and damages. But which state’s laws govern the insurance contract?

Young v. USAA General Indemnity Company, decided March 9, 2022, by the SC Court of Appeals, illustrates why it matters and how the courts will determine which state’s laws govern an out-of-state insurance policy.

An Out-of-State Insurance Policy Covers Your Car Accident in SC

In most cases, it doesn’t matter if the at-fault driver’s insurance policy was purchased in another state – if the policy covers the driver and the vehicle, the insurance company is on the hook for damages if their insured causes an accident.

In some cases, however, it does matter if another state’s law governs the terms of the insurance contract.

For example, in Young v. USAA, Mrs. Young was responsible for a tragic car accident in SC, where she was living with her three children. Mr. Young was on deployment to Guam at the time of the car accident, and Mrs. Young and the children has just moved back to SC from California a few weeks before the crash. Two of the children were killed in the accident.

When Mr. Young made a claim on behalf of the children, USAA took the position that California law controlled the terms of the insurance – the policy was purchased in California, the insured vehicle was listed as principally garaged in California although it was located in Guam with Mr. Young, and the accident in SC happened in a different vehicle.

Because the policy did not contain undersinsured motorist (UIM) coverage that complied with SC law, USAA refused to pay benefits under the California policy. If SC law applies, however, the policy must be reformed to meet the requirements of SC law, and USAA would be required to pay additional compensation under the UIM policy.

What State’s Law Applies to the Insurance Coverage?

So which state’s law applies to an out-of-state insurance policy?

SC Code § 38-77-160 requires automobile insurance carriers to offer uninsured motorist (UM) and underinsured motorist (UIM) coverage up to the limits of the insured’s liability coverage:

Automobile insurance carriers shall offer, at the option of the insured, uninsured 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 an out-of-state insurance policy does not comply with SC’s insurance requirements, the court will reform the policy so that it does comply with SC’s requirements if it is a policy that insures “property, lives, or interests” in SC. SC Code § 38-61-10 says:

All contracts of insurance on property, lives, or interests in this State are considered to be made in the State and all contracts of insurance the applications for which are taken within the State are considered to have been made within this State and are subject to the laws of this State.

The Court of Appeals found that there was a sufficient connection between the policy and SC, and, therefore, SC law applies, because:

  • The policy insured the Young family, not just the vehicle that was located in Guam,
  • The policy provided UM coverage for each member of the family regardless of whether they occupied the insured vehicle,
  • The Youngs were SC citizens, and
  • Four members of the family were physically living in SC at the time of the car accident.

It doesn’t matter if the named vehicle was located in Guam at the time of the accident – Mrs. Young and the children were living in SC, the policy covered lives and interests in SC, and, therefore, the policy is subject to SC law.

Can a Parent Recover Damages for a Child Injured in a Car Accident that was the Parent’s Fault?

If you are in an accident, the accident is your fault, and your children or another passenger are injured because of your negligence, you are liable to the injured parties whether they are strangers or family members.

At first glance, this might seem strange, but the insurance company agrees to pay damages to any person who is injured because of the insured’s negligence in exchange for the insured’s payment of their premiums – as long as there is no collusion, it doesn’t matter who the injured person is.

SC law also prohibits “step-down provisions” in insurance policies. SC Code Section 38-77-142 requires SC automobile contracts to contain:

…a provision insuring the named insured and any other person using or responsible for the use of the motor vehicle with the expressed or implied consent of the named insured against liability for death or injury sustained or loss or damage incurred within the coverage of the policy or contract as a result of negligence in the operation or use of the vehicle by the named insured or by any such person.

In Nationwide v. Walls and Williams v. Geico, the SC Supreme Court has held that step-down provisions that attempt to exclude a class of persons from coverage in an insurance policy are void and unenforceable, whether the policy attempts to exclude family members or another group like persons fleeing from law enforcement.

Car Accident Lawyers in Conway, SC

If you are hurt in an auto accident caused by another driver in Conway or Myrtle Beach, SC, consult with an experienced trial lawyer immediately who can help you to gather the evidence you need to prove liability and damages, settle your claim for full and fair compensation, and try your case to a jury if the insurance company doesn’t pay.

Call Johnny Gardner Law now at 843-248-7135 or send us an email through our website to find out how we can help.