South Carolina General Assembly
107th Session, 1987-1988

Bill 4029


                    Current Status

Bill Number:               4029
Ratification Number:       613
Act Number                 539
Introducing Body:          House
Subject:                   Policies ceded to the South Carolina
                           Reinsurance Facility
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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A539, R613, H4029)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-77-630 SO AS TO PROVIDE THAT AN AUTOMOBILE LIABILITY INSURANCE POLICY MAY NOT BE CEDED TO THE SOUTH CAROLINA REINSURANCE FACILITY UNLESS IT IS ACCOMPANIED BY A RENEWAL NOTICE, A MOTOR VEHICLE REPORT ISSUED WITHIN SIXTY DAYS OF THE DATE OF THE BINDER AND THE FULL, PROPER PREMIUM, OR, IN THE CASE OF AN APPLICANT HAVING A DRIVER'S LICENSE FROM ANOTHER STATE BUT NOT YET LICENSED IN THIS STATE, A COPY OF HIS LICENSE.

Whereas, many of our worst motor vehicle drivers take advantage of a legal loophole to avoid paying their share of auto insurance premiums and, in the process, greatly increase the administrative costs of the auto insurance system; and

Whereas, by misrepresenting or omitting facts which affect premium calculations, many people obtain binders of insurance for too little initial payment and the application is submitted to the carrier who thereafter obtains a motor vehicle report (MVR), bills the insured for additional premium based on the facts as shown in the MVR, waits the required time, and then cancels the policy for nonpayment of premium; and

Whereas, the streetwise applicant knows this process takes about four months and when cancellation is imminent he starts the cycle over again with a different agent and by doing this three or four times a year a person who should pay, for example, a two thousand dollar annual premium insures for a fraction of that amount; and

Whereas, this process shifts an unfair premium burden to better drivers, adds unnecessary administrative costs to the system, and undermines a basic premise of the law that economic considerations must tend to promote responsible driving practices and remove the worst offenders from the road; and

Whereas, this abuse of the system may be rectified by the simple requirement that either a current renewal notice or MVR be submitted with a policy, other than a renewal policy, ceded to the South Carolina Reinsurance Facility. Now, therefore,

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

Policies ceded to the South Carolina Reinsurance Facility

SECTION 1. The 1976 Code is amended by adding:

"Section 38-77-630. A policy, other than a renewal policy, may be ceded to the South Carolina Reinsurance Facility only when the application is accompanied by either a renewal notice from another insurer or a motor vehicle report (MVR), issued within sixty days of the date of the binder, together with the full premium correctly reflecting the facts shown on the MVR or consistent with the premium quoted in the renewal notice.

To facilitate compliance with this requirement, a carrier may require an applicant other than a renewal applicant, to obtain the MVR or a renewal notice from the insurance carrier who provided the insurance coverage then in effect and present it to the agent upon making an application. In those cases, the applicant must be credited for the amount paid for the MVR.

In the case of an applicant who holds a valid driver's license from another state but is not yet licensed in this State, a copy of this out-of-state driver's license may be submitted with the application in lieu of the MVR or renewal notice above required in this section. The MVR renewal notice or driver's license, as applicable, must be kept with the application by the carrier in that manner as the Facility may require."

Time effective

SECTION 2. This act takes effect July 1, 1988.