Bill 3735

                    Current Status

Bill Number:               3735
Ratification Number:       749
Act Number                 641
Introducing Body:          House
Subject:                   To make it unlawful for a licensed
                           insurance agent knowingly to present or aid in
                           the preparation of an insurance application
                           containing false or misleading information

(A641, R749, H3735)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-43-245 SO AS TO MAKE IT UNLAWFUL FOR A LICENSED INSURANCE AGENT KNOWINGLY TO PRESENT OR AID IN THE PREPARATION OF AN INSURANCE APPLICATION CONTAINING FALSE OR MISLEADING INFORMATION MATERIAL TO THE UNDERWRITING OR WHICH OMITS MATERIAL INFORMATION AND TO PROVIDE A PENALTY FOR VIOLATIONS; TO AMEND SECTION 38-77-340, RELATING TO EXCLUDING DESIGNATED NATURAL PERSONS FROM MOTOR VEHICLE LIABILITY INSURANCE COVERAGE, SO AS TO CORRECT REFERENCES; TO AMEND SECTIONS 38-73-455, 56-10-270, AS AMENDED, AND 38-77-280, AS AMENDED, RELATING TO MOTOR VEHICLE LIABILITY INSURANCE COVERAGE, OPERATING AN UNINSURED VEHICLE, AND PHYSICAL DAMAGE COVERAGE, SO AS TO DELETE REFERENCES TO A REPEALED CODE SECTION AND INCREASE THE PENALTIES FOR OPERATING AN UNINSURED MOTOR VEHICLE; AND TO REPEAL SECTION 56-10-60 RELATING TO EXCLUSION OF PERSONS FROM MOTOR VEHICLE LIABILITY INSURANCE COVERAGE.

Be it enacted by the General Assembly of the State of South Carolina:

Felony

SECTION 1. Article 1, Chapter 43, Title 38 of the 1976 Code is amended by adding:

"Section 38-43-245. Any licensed insurance agent who, with the intent to injure, defraud, or deceive any insurance company or applicant for insurance:

(1) presents or causes to be presented to any insurance company an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the application is submitted, or

(2) assists, abets, solicits, or conspires with another to prepare or make an application for insurance, knowing that the application contains any false or misleading information or omissions concerning any fact or thing material to the underwriting of the insurance for which the applicant is submitted, is guilty of a felony and, upon conviction, must be punished by imprisonment for not more than five years or a fine not to exceed five thousand dollars, or both."

Exclusion

SECTION 2. The first paragraph of Section 38-77-340 of the 1976 Code is amended to read:

"Notwithstanding the definition of 'insured' in Section 38-77-30, the insurer and any named insured must, by the terms of a written amendatory endorsement, the form of which has been approved by the Chief Insurance Commissioner, agree that coverage under such a policy of liability insurance shall not apply while the motor vehicle is being operated by a natural person designated by name. The agreement, when signed by the named insured and the person to be excluded, or by someone acting in the excluded person's behalf, is binding upon every insured to whom the policy applies. However, no natural person may be excluded unless (1) his driver's license has been turned in to the South Carolina Department of Highways and Public Transportation or (2) an appropriate policy of liability insurance or other security as may be authorized by law has been properly executed in the name of the person to be excluded. The agent of the insurer writing the policy of insurance excluding a named driver shall determine that the necessary driver's license has been delivered to the Department of Highways and Public Transportation or that a policy of insurance or security described in item (2) of this section is in effect before submitting the application for exclusion of a named driver."

Applicants

SECTION 3. The second and third paragraphs immediately preceding Section 38-73-455(A)(1) of the 1976 Code are amended to read:

"Applicants, or a current policyholder, seeking automobile insurance with an insurer must be written at the base rate unless one of the conditions or factors in subitems (1) through (8) of item (A) is present.

(A) The named insured or any operator who is not excluded in accordance with Section 37-77-340 and who resides in the same household or customarily operates an automobile insured under the same policy, individually:".

Misdemeanor

SECTION 4. Section 56-10-270(a) of the 1976 Code, as last amended by an act of 1988 bearing ratification number 603, is further amended to read:

"(a) Any person knowingly operating an uninsured motor vehicle subject to registration in this State or any person knowingly allowing the operation of an uninsured motor vehicle subject to registration in this State is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars nor more than two hundred dollars or imprisoned for thirty days and, upon conviction of a second offense, be fined two hundred dollars or imprisoned for thirty days, or both, and for a third and subsequent offenses must be imprisoned for not less than forty-five days nor more than six months. Only convictions which occurred within five years including and immediately preceding the date of the last conviction constitute prior convictions within the meaning of this section. An uninsured motor vehicle includes an insured vehicle with respect to which the operator has been excluded from coverage pursuant to the provisions of Section 38-77-340."

Refusal

SECTION 5. Section 38-77-280(B) of the 1976 Code, as last amended by an act of 1988 bearing ratification number 429, is further amended to read:

"(B) Notwithstanding subsection (A) and Sections 38-77-110 and 38-77-920, automobile insurers may refuse to write automobile physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage, for any applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or any other operator not excluded in accordance with Section 38-77-340 and who resides in the same household, where one or more of the conditions or factors prescribed in Section 38-73-455 exist. In addition, automobile insurers may refuse to write physical damage insurance coverage to any applicant or existing policyholder, on renewal, who has collected benefits provided under any automobile insurance physical damage coverage during the thirty-six months immediately preceding the effective date of coverage, for two or more total fire losses or two or more total theft losses."

Repeal

SECTION 6. Section 56-10-60 of the 1976 Code is repealed.

Time effective

SECTION 7. This act takes effect upon approval by the Governor, except for Sections 4 and 6 which take effect on January 1, 1989.