South Carolina General Assembly
110th Session, 1993-1994

Bill 3401


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Introducing Body:               House
Bill Number:                    3401
Primary Sponsor:                Corning
Committee Number:               26
Type of Legislation:            GB
Subject:                        Uninsured motor vehicles
Residing Body:                  House
Current Committee:              Labor, Commerce and Industry
Computer Document Number:       BBM/9077JM.93
Introduced Date:                19930204    
Last History Body:              House
Last History Date:              19930204    
Last History Type:              Introduced, read first time,
                                referred to Committee
Scope of Legislation:           Statewide
All Sponsors:                   Corning
                                     Cato
                                     H. Brown
                                     Shissias
                                     Harrison
                                     Jaskwhich
                                     A. Young
                                     Gamble
                                     Clyborne
                                     Meacham
                                     Vaughn
                                     Haskins
Type of Legislation:            General Bill



History


Bill  Body    Date          Action Description              CMN  Leg Involved
____  ______  ____________  ______________________________  ___  ____________

3401  House   19930204      Introduced, read first time,    26
                            referred to Committee

View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND TITLE 56, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO MOTOR VEHICLES, BY ADDING CHAPTER 2 SO AS TO ENACT PROVISIONS FOR THE REGISTRATION AND LICENSING OF UNINSURED MOTOR VEHICLES, AND BY ADDING CHAPTER 4 SO AS TO ENACT THE "MOTOR VEHICLE SAFETY RESPONSIBILITY ACT", INCLUDING PROVISIONS COVERING ADMINISTRATION AND ENFORCEMENT, SECURITY FOLLOWING AN ACCIDENT, PROOF OF FINANCIAL RESPONSIBILITY FOR THE FUTURE, MOTOR VEHICLE LIABILITY POLICIES, AND THE ASSOCIATED AUTOMOBILE INSURERS OF SOUTH CAROLINA, WHICH IS AN UNINCORPORATED, NONPROFIT, INDEPENDENT, LEGAL ENTITY FOR THE PROVIDING OF AUTOMOBILE INSURANCE FOR CERTAIN INSUREDS; AND TO REPEAL ARTICLES 1, 3, AND 5, CHAPTER 77, TITLE 38, RELATING TO AUTOMOBILE INSURANCE, PURPOSES AND DEFINITIONS, THE "MANDATE TO WRITE" AND INSURANCE COVERAGE, AND THE REINSURANCE FACILITY AND DESIGNATED PRODUCERS, CHAPTER 9, TITLE 56, RELATING TO THE MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT, AND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION AND FINANCIAL SECURITY.

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

SECTION 1. Title 56 of the 1976 Code is amended by adding:

"CHAPTER 2

Registration and Licensing of

Uninsured Motor Vehicles

Section 56-2-10. As used in this chapter:

(1) `Conviction' also includes the entry of any plea of guilty or nolo contendere and the forfeiture of any bail or collateral deposited to secure a defendant's appearance.

(2) `Insured motor vehicle' is a motor vehicle as to which (a) there is bodily injury liability insurance and property damage liability insurance, both in the amounts specified in Section 56-4-830, issued by an insurer authorized to do business in this State, (b) a bond has been given or cash or securities delivered in lieu of the insurance, or (c) the owner has qualified as a self-insurer in accordance with the provisions of Section 56-4-90; and

(3) `Uninsured motor vehicle' is a motor vehicle required to be registered as to which (a) there is no bodily injury liability insurance and property damage liability insurance, (b) no bond has been given or cash or securities delivered in lieu thereof, or (c) the owner has not qualified as a self-insurer.

Section 56-2-20. In addition to any other fees prescribed by law, every person registering and licensing an uninsured motor vehicle, as defined in Section 56-2-10, in this State shall pay, at the time of registering and licensing an uninsured motor vehicle, a sum to be fixed by the Chief Insurance Commissioner but not to exceed one hundred dollars. Credit for payment made on a motor vehicle subsequently transferred during the same licensing year must be applied to any motor vehicle thereafter registered by the uninsured motorist during the same licensing year.

Section 56-2-30. The Department of Highways and Public Transportation may require that a person applying for licensing and registration of a motor vehicle shall certify under the penalties set forth in Section 56-2-110 whether or not each motor vehicle is an insured motor vehicle as defined in Section 56-2-10, or the department may in its discretion require that a person (a) produce as evidence of financial responsibility a certificate on a form prescribed by the department of insurance or self-insurance complying with the requirements of Section 56-4-90, (b) has given bond or delivered the cash or securities as provided in Sections 56-4-660 and 56-4-670, respectively, or (c) pay the fee prescribed in Section 56-2-20.

Section 56-2-40. Upon the termination of insurance by cancellation or failure to renew, notice of the cancellation or other termination must be filed by the insurer with the department not later than five days following the effective date of the cancellation or other termination.

Section 56-2-50. The department shall, upon receipt of the notice of cancellation or termination provided for in Section 56-2-40, revoke the certificate of registration and license plates of the motor vehicle with respect to which the policy was in force, unless the owner either gives evidence that the vehicle is an insured vehicle in the manner provided in Section 56-2-30 or pays the fee provided in Section 56-2-20.

Section 56-2-60. All funds collected by the department under the provisions of this chapter must be deposited to the credit of the State Treasurer and monthly transferred to a special deposit fund to be known as the `Uninsured Motorists Fund' to be disbursed as provided in Section 56-2-70 to 56-2-90.

Section 56-2-70. The fund is under the supervision and control of the Chief Insurance Commissioner and must be paid out, on warrants of the Comptroller General issued on vouchers signed by the commissioner or persons he designates, for the purpose of defraying the costs of administration of this chapter and chapters of this title by the department and for reducing the costs of the endorsement or provisions provided in Section 56-2-80.

Section 56-2-80. The Chief Insurance Commissioner annually, at the time during each year he considers best, shall make distribution from the fund as follows:

(1) to the department, the amount certified by it as its administrative costs and expenses for this chapter and Chapter 4 of this title. These payments may be made on a quarterly basis.

(2) Among the several insurance companies writing motor vehicle bodily injury and property damage insurance on motor vehicles registered in this State, the balance of the fund, subject to the limitations of Sections 56-2-70 to 56-2-90, after taking out the administrative costs to be paid to the department. Distribution among the insurance companies must be in the proportion that the number of policies issued by each insurance company bearing the endorsement or provision required to be made available to policyholders pursuant to Section 56-4-840 bears to the total number of the policies bearing the endorsement or provision written in this State during the preceding year. The total amount to be distributed among the insurance companies for any year may not exceed the aggregate amount of loss experienced by the companies under the endorsements or provisions, as determined by the Chief Insurance Commissioner, during the year for which the distribution is made. The amount payable to any insurance company under this section applies only to those companies maintaining records satisfactory to the commissioner.

Section 56-2-90. If the amount in the fund exceeds the amount distributable to the department and among the insurance companies or if, for any reason, the funds cannot be expended, the balance remaining in the fund must be held in reserve in the fund with the State Treasurer against years in which there may be a deficit. If the fund in any year is insufficient to pay the administrative costs and the aggregate amount of loss experienced by the several insurance companies, as defined in Section 56-2-30, the insurance companies have a proportionate claim against the fund and must be paid the difference during any succeeding year that the fund has a surplus.

Section 56-2-100. The Chief Insurance Commissioner may promulgate regulations necessary to implement the provisions of this chapter.

Section 56-2-110. A person who knowingly makes a false certificate as to whether a motor vehicle is an insured motor vehicle or gives to the department false evidence that any motor vehicle sought to be registered is insured is guilty of a misdemeanor and, upon conviction, must be fined not less than five hundred dollars or imprisoned for ninety days. The department shall deny, for six months, registration of any motor vehicle for which a false certificate or false evidence is presented to the effect that the vehicle is insured and shall revoke, and may not thereafter reissue for six months, the driver's license of a person making a false certificate or offering false evidence as specified in this section.

Section 56-2-120. This chapter does not repeal any other provision contained in this title, but is cumulative to such other provisions."

SECTION 2. Title 56 of the 1976 Code is amended by adding:

"CHAPTER 4

Motor Vehicle Safety Responsibility Act

Article 1

General Provisions

Section 56-4-10. This chapter may be cited as the `Motor Vehicle Safety Responsibility Act'.

Section 56-4-20. As used in this chapter:

( 1) `Conviction' also includes the entry of any plea of guilty or nolo contendere and the forfeiture of bail or collateral deposited to secure a defendant's appearance in court.

( 2) `Department' means the Department of Highways and Public Transportation acting directly or through its authorized officers and agents.

( 3) `Insured motor vehicle' means, except in Article 9 of this chapter, a motor vehicle as to which there is bodily injury liability insurance and property damage liability insurance, both in the amounts required by law, issued by an insurer authorized to do business in this State, or as to which a bond has been given or cash or securities delivered in lieu of the insurance or as to which the owner has qualified as a self-insurer in accordance with the provisions of Section 56-4-90.

( 4) `Judgment' is any judgment which has become final by expiration without appeal of the time within which an appeal might have been perfected or by final affirmance on appeal, rendered by a court of competent jurisdiction of any state of the United States, upon a cause of action arising out of the ownership, maintenance, or use of any motor vehicle, for damages, including damages for care and loss of service, because of bodily injury to or death of a person or for damages because of injury to or destruction of property, including the loss of use thereof, or upon a cause of action on an agreement for such damages.

( 5) `License' is any license, temporary instruction permit, or temporary license issued under the laws of this State pertaining to the licensing of persons to operate vehicles.

( 6) `Motor vehicle' is every self-propelled vehicle which is designed for use upon a highway, including trailers and semitrailers designed for use with the vehicles, but excepting traction engines, road rollers, farm tractors, tractor cranes, power shovels, and well drillers.

( 7) `Motor vehicle liability policy' is an owner's or an operator's policy of liability insurance, certified as provided in Section 56-4-640 or 56-4-650 as proof of financial responsibility and issued, except as otherwise provided in Section 56-4-650, by an insurer authorized to transact business in this State, to or for the benefit of the person named in it as insured.

( 8) `Nonresident' means every person who is not a resident of this State.

( 9) `Nonresident operating privilege' is the privilege conferred upon a nonresident by the laws of this State pertaining to the operation by him of a motor vehicle or the use of a motor vehicle owned by him in this State.

(10) `Operator' means a person who is in actual physical control of a motor vehicle, whether or not licensed as an operator or chauffeur under the laws of this State.

(11) `Owner' is a person who holds the legal title of a motor vehicle, or, if a motor vehicle is the subject of an agreement for the conditional sale or lease thereof with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee or in the event a mortgagor of a vehicle is entitled to possession, then the conditional vendee or lessee or mortgagor is considered the owner for the purposes of this chapter.

(12) `Person' means a natural person, firm, partnership, association, or corporation.

(13) `Proof of financial responsibility' means proof of ability to respond in damages for liability on account of accidents occurring after the effective date of the proof, arising out of the ownership, maintenance, or use of a motor vehicle, in the amount of fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to the limit for one person, in the amount of thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and in the amount of five thousand dollars because of injury to or destruction of property of others in any one accident.

(14) `Registration' means registration certificates and registration or license plates issued under the laws of this State pertaining to the license and registration of motor vehicles.

(15) `State' means any state, territory, or possession of the United States, the District of Columbia, or any Canadian province.

(16) `Uninsured motor vehicle' means, except in Article 9 of this chapter, a motor vehicle as to which there is no bodily injury liability insurance and property damage liability insurance as described in item (3) of this section or no bond has been given or cash or securities delivered in lieu thereof as described in that item or the owner of which has not qualified as a self-insurer in accordance with the provisions of Section 56-4-90.

Section 56-4-30. This chapter must be construed to effectuate its general purpose to make uniform the laws of those states which enact substantially identical legislation.

Section 56-4-40. This chapter does not apply with respect to any motor vehicle owned by the United States, this State, or any political subdivision of this State, nor, except for Section 56-4-310, 56-4-410, and 56-4-680, does it apply with respect to any motor vehicle which is subject to other laws of this State which require their owners to carry insurance or to place security in a manner which would make those owners carry insurance or place security in addition to the amounts required by this chapter.

Section 56-4-50. This chapter does not affect the rights of any conditional vendor, chattel mortgagee, or lessor of a motor vehicle registered in the name of another as owner who becomes subject to the provisions of this chapter.

Section 56-4-60. This chapter does not prevent the owner of a motor vehicle, the registration of which has been suspended under this chapter, from effecting a bona fide sale of the motor vehicle to another person whose rights or privileges are not suspended under this chapter nor prevent the registration of the motor vehicle by the transferee.

Section 56-4-70. Nothing in this chapter may be construed to prevent the plaintiff in any action at law from relying for relief upon the other processes provided by law.

Section 56-4-80. This chapter may in no respect be considered as a repeal of any other provision contained in this title or the motor vehicle laws of this State but must be construed as supplemental and cumulative thereto.

Section 56-4-90. A person in whose name more than twenty-five motor vehicles are registered may qualify as a self-insurer by obtaining a certificate of self-insurance issued by the department as provided in this section. The department may, in its discretion, upon the application of the person, issue a certificate of self-insurance when it is satisfied that the person is possessed and will continue to be possessed of ability to pay judgments obtained against him. Upon not less than five days' notice and a hearing pursuant to the notice the department may, upon reasonable grounds, cancel a certificate of self-insurance. Failure to pay any judgment within thirty days after the judgment becomes final constitutes a reasonable ground for the cancellation of a certificate of self-insurance.

Section 56-4-100. A person who forges or, without authority, signs any notice provided for under Sections 56-4-320 to 56-4-340 that a policy or bond is in effect or any evidence of proof of financial responsibility, or who files or offers for filing any such notice or evidence of proof, knowing, or having reason to believe, that it is forged or signed without authority, is guilty of a misdemeanor and, upon conviction, must be fined not more than two thousand dollars or imprisoned not more than two years, or both.

Section 56-4-120. A person who violates any provision of this chapter, for which no penalty is otherwise provided, is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned not more than ninety days.

Section 56-4-130. This chapter does not apply to any accident or judgment arising therefrom or violation of the motor vehicle laws of this State occurring before January 1, 1995.

Article 3

Administration and Enforcement

Section 56-4-210. The department shall administer and enforce the provisions of this chapter and may promulgate regulations necessary for its administration.

Section 56-4-220. Where appropriate, provisions of Chapter 23 of Title 1 apply with respect to contested cases of administrative procedures arising under this chapter.

Section 56-4-230. The department shall, upon request, furnish a person a certified abstract of the operating record of a person subject to the provisions of this chapter, which also fully designates the motor vehicles, if any, registered in the name of that person. If there is no record of any conviction of that person for violating any laws relating to the operation of a motor vehicle or of any injury or damage caused by that person, the department shall so certify. These abstracts are not admissible as evidence in any action for damages or criminal proceedings arising out of a motor vehicle accident.

Section 56-4-240. A person (1) whose license and registration has been suspended as provided in this chapter, (2) whose policy of insurance or bond, when required under this chapter, has been canceled or terminated, or (3) who has neglected to furnish other proof upon request of the department shall immediately return his license and registration to the department. If any person fails to return to the department his license or registration as provided in this section, the department may secure its possession by a highway patrolman.

A person wilfully failing to return his license or registration as required in this section is guilty of a misdemeanor and, upon conviction, must be fined three hundred dollars or imprisoned sixty days.

Section 56-4-250. After consultation with insurers authorized to issue automobile liability policies in this State, the Chief Insurance Commissioner shall approve a reasonable plan or plans for the equitable apportionment among the insurers of applicants for the policies and for motor vehicle liability policies who are in good faith entitled to the policies but are unable to procure them through ordinary methods or who desire to obtain coverage under the provisions of this section. Any plan must include the establishment of uniform premium rates as to each class of risk, based on the combined loss experience of all companies who participate in the Associated Automobile Insurers plan, on their risk experience as a separate class. All insureds must be insured uniformly within every classification; there may be no discrimination whatsoever. When the plan has been approved, all insurance companies shall subscribe to and participate in it. Any person aggrieved under this section by any order or act of the commissioner may appeal the order or act as a contested case under the provisions of Chapter 23 of Title 1.

If the plan contains a provision that under certain circumstances the carrying insurer shall offer to renew coverage for one year under a policy form issued to risks not participating in the Associated Automobile Insurers plan, subject to the rates, minimum premiums, and classifications in force for these risks, the insured may request an agent of his choosing to help complete the transaction and any subsequent renewals or changes, and the agent may charge the insured a fee of not more than ten percent of the premium involved. No fee may be charged if the carrying company recognizes the agent as producer of record and pays him not less than ten percent commission.

Article 5

Security Following Accident

Section 56-4-310. The driver of a vehicle involved in an accident resulting in injury to or death of any person or total property damage to an apparent extent of two hundred dollars or more, within five days after the accident, shall forward a written report of the accident to the department as required by law. The report must contain information to enable the department to determine whether the requirements for the deposit of security under Section 56-4-320 are inapplicable by reason of the existence of insurance or other exceptions specified in this chapter.

Section 56-4-320. The department upon receipt of a report of a motor vehicle accident in this State which has resulted in bodily injury or death or damage to the property of any one person in excess of two hundred dollars shall, within sixty days after the receipt, suspend the license of each operator or driver and all registrations of each owner of a motor vehicle involved in the accident and, if the operator or driver is a nonresident, the privilege of operating a motor vehicle in this State and the privilege of the use within this State of any motor vehicle owned by him, unless: (1) the operator, driver, or owner, or both, deposits security in a sum not less than two hundred dollars or an additional amount as the department specifies that is sufficient to satisfy any judgment that may be recovered for damages resulting from the accident which may be recovered against the operator or owner and (2) the owner and operator shall immediately give and thereafter maintain proof of financial responsibility on all motor vehicles owned or operated by them. Notice of the suspension must be sent by the department to the operator and owner at least ten days before the effective date of the suspension and must state the amount required as security.

Section 56-4-330. Section 56-4-320 does not apply to any of the following:

(1) to the operator or owner if the owner had in effect at the time of the accident an automobile liability policy with respect to the motor vehicle involved in the accident;

(2) to the operator, if not the owner of the motor vehicle, if there was in effect at the time of the accident an automobile liability policy or bond with respect to his operation of motor vehicles not owned by him;

(3) to the operator or owner if the liability of the operator or owner for damages resulting from the accident is, in the judgment of the department, covered by any other form of liability insurance policy or bond;

(4) to any person qualifying as a self-insurer under Section 56-4-90;

(5) to the operator or owner of a motor vehicle involved in an accident in which no injury or damage was caused to the person or property of anyone other than the owner or operator;

(6) to the owner of a motor vehicle if at the time of the accident the vehicle was being operated without his permission, express or implied, or was parked by a person who had been operating the motor vehicle without his permission, express or implied;

(7) if, before the date that the department would otherwise suspend the license and registration or nonresident's operating privilege under Section 56-4-320, there must be filed with the department evidence satisfactory to it that the person who would otherwise have to file security (a) has been released from liability, (b) has been finally adjudicated not to be liable, (c) has executed a warrant for confession of judgment, payable when and in installments the parties have agreed to, or (d) has executed a duly acknowledged written agreement, providing for the payment of an agreed amount in installments, with respect to all claims for injuries or damages resulting from the accident; or

(8) to the owner of any legally parked vehicle when struck by another vehicle.

Section 56-4-340. No policy or bond is effective under Sections 56-4-320 and 56-4-330 unless issued by an insurer or surety company authorized to do business in this State, except that if the motor vehicle was not registered in this State or was a motor vehicle which was registered elsewhere than in this State at the effective date of the policy or bond or the most recent renewal thereof, the policy or bond is not effective under Sections 56-4-320 and 56-4-330 unless the insurer or surety company, if not authorized to do business in this State, executes a power of attorney authorizing the department to accept service on its behalf of notice or process in any action upon the policy or bond arising out of the accident. Every policy or bond must be subject, if the accident has resulted in bodily injury or death, to a limit, exclusive of interest and costs, of not less than fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to this limit for one person, to a limit of not less than thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and, if the accident has resulted in injury to or destruction of property, to a limit of not less than five thousand dollars because of injury to or destruction of property of others in any one accident.

Section 56-4-350. The license and registration and nonresident's operating privilege suspended as provided in Section 56-4-320 must, except as otherwise provided in Section 56-4-410, remain suspended and may not be renewed, nor may any license or registration be issued to him, until:

(1) he deposits, or there is deposited on his behalf, the security required under Section 56-4-320;

(2) two years have elapsed following the date of the accident and evidence satisfactory to the department has been filed with it that during that period no action for damages arising out of the accident has been instituted; or

(3) evidence satisfactory to the department has been filed with it of a release from liability, a final adjudication of nonliability, a warrant for confession of judgment, or a duly acknowledged written agreement, in accordance with Section 56-4-330(7). If there is any default in the payment of any installment under any confession of judgment, then, upon notice of default, the department shall suspend the license and registration or nonresident's operating privilege of the person defaulting, which may not be restored until the entire amount provided for in confession of judgment has been paid. If there is any default in the payment of any installment under any acknowledged written agreement, then, upon notice of default, the department shall suspend the license and registration or nonresident's operating privilege of the person defaulting, which may not be restored until (a) he deposits and thereafter maintains security as required under Section 56-4-320 in the amount the department determines or (b) two years have elapsed following the date when the security was required and during that period no action upon the agreement has been instituted in a court in this State.

Section 56-4-360. If the driver or the owner of a vehicle of a type subject to registration under the laws of this State, involved in an accident within this State, has no license or registration in this State, the driver is not allowed a license nor is an owner allowed to register any vehicle in this State until he has complied with the requirements of this article to the same extent that would be necessary if at the time of the accident he had held a license or been the owner of a vehicle registered in this State.

Section 56-4-370. When a nonresident's operating privilege is suspended pursuant to Sections 56-4-320 or 56-4-350, the department shall transmit a certified copy of the record of the action to the official in charge of the issuance of licenses and registration certificates in the state in which the nonresident resides, if the law of the other state provides for action in relation thereto similar to that provided for under the laws of this State.

Section 56-4-380. Upon receipt of the certification that the operating privilege of a resident of this State has been suspended or revoked in the other state pursuant to a law providing for its suspension or revocation for failure to deposit security for the payment of judgments arising out of a motor vehicle accident under circumstances which would require the department to suspend a nonresident's operating privilege had the accident occurred in this State, the department shall suspend the license of the resident if he was the driver and all of his registrations if he was the owner of a motor vehicle involved in the accident. This suspension continues until the resident furnishes evidence of compliance with the law of the other state relating to the deposit of the security.

Section 56-4-390. The security required under this article must be in the form and in the amount that the department requires but in no case in excess of the limits specified in Section 56-4-340 in reference to the acceptable limits of a policy or bond. The person depositing security shall specify in writing the person on whose behalf the deposit is made and, at any time while the deposit is in the custody of the department or State Treasurer, the person depositing it may, in writing, amend the specifications of the persons on whose behalf the deposit is made to include additional persons; but a single deposit of security is applicable only on behalf of persons required to furnish security because of the same accident.

Section 56-4-400. The department may at any time reduce the amount of security ordered in any case if, in its judgment, the amount ordered is excessive. In case the security originally ordered has been deposited, the excess deposited over the reduced amount ordered must be returned to the depositor or his personal representative, notwithstanding the provisions of Section 56-4-410. In no case may the department reduce the amount of security to a sum less than two hundred dollars.

Section 56-4-410. Security deposited in compliance with the requirements of this article must be placed by the department in the custody of the State Treasurer and is applicable only to the payment of judgments rendered against the persons on whose behalf the deposit was made for damages arising out of the accident in question in an action at law begun not later than two years after the date of the accident or within two years after the date of deposit of any security under Section 56-4-350(3), and this deposit or any balance must be returned to the depositor or his personal representative when evidence satisfactory to the department has been filed with it that there has been a release from liability, a final adjudication of nonliability, a warrant for confession of judgment, or a duly acknowledged agreement, in accordance with Section 56-4-330(7), or when, after the expiration of two years from the date of the accident or within two years after the date of deposit of any security under Section 56-4-350(3), the department is given reasonable evidence that there is no action pending and no judgment rendered in the action left unpaid.

Section 56-4-420. When any person whose license would otherwise have been suspended for failure to deposit security required pursuant to this article is, or later becomes, an operator in the employ of another owner, the department may in its discretion, notwithstanding any provisions in this chapter to the contrary, allow the person to retain his license to operate a vehicle of another owner, in the pursuit of the employment, if the employer-owner of the vehicle has furnished proof of financial responsibility covering the operation of any vehicle which the person may be permitted to operate. The department shall designate the restrictions imposed pursuant to this section on that person's license.

Section 56-4-430. Neither the action taken by the department pursuant to this article, the findings, if any, of the department upon which action is based, nor the security filed as provided in this article may be referred to in any way or be any evidence of the negligence or due care of either party at the trial of any action at law to recover damages.

Article 7

Proof of Financial Responsibility

for the Future

Section 56-4-510. When any person fails within sixty days to satisfy any judgment, it is the duty of the clerk of court, or of the judge of a court which has no clerk, in which any judgment is rendered within this State to forward to the department immediately after the expiration of sixty days a certified copy of the judgment.

Section 56-4-520. If the defendant named in any certified copy of a judgment reported to the department is a nonresident, the department shall transmit a certified copy of the judgment to the official in charge of the issuance of licenses and registration certificates of the state of which the defendant is resident.

Section 56-4-530. The department, upon receipt of a certified copy of judgment, shall suspend the license and registration and any nonresident's operating privilege of any person against whom the judgment was rendered, except as otherwise provided in Sections 56-4-540 to 56-4-560 and 56-4-590.

Section 56-4-540. If the judgment creditor consents in writing, in the form which the department may prescribe, that the judgment debtor is allowed license and registration or nonresident's operating privilege, this may be allowed by the department for six months from the date of the consent and thereafter until the consent is revoked in writing, notwithstanding default in the payment of the judgment or any installment thereof prescribed in Section 56-4-590 if the judgment debtor furnishes proof of financial responsibility.

Section 56-4-550. A person whose license, registration, or nonresident's operating privilege has been suspended or is about to be suspended or becomes subject to suspension under the provisions of this article may be relieved from the effect of the judgment as prescribed in this article by filing with the department an affidavit stating that at the time of the accident upon which the judgment has been rendered the affiant was insured, that the insurer is liable to pay the judgment, and the reason, if known, why the insurance company has not paid the judgment. He shall also file the original policy of insurance or a certified copy thereof, if available, and other documents which the department may require to show that the loss, injury, or damage for which the judgment was rendered was covered by the policy of insurance. If the department is satisfied from these papers that the insurer was authorized to issue the policy of insurance at the time and place of issuing the policy and that the insurer is liable to pay the judgment, at least to the extent and for the amounts required in this chapter, the department shall not suspend the license or registration or nonresident's operating privilege or, if already suspended, shall reinstate them.

Section 56-4-560. Whenever a person whose license would otherwise have been suspended for failure to satisfy a judgment as provided in Section 56-4-530 is, or later becomes, an operator in the employ of another owner, the department may, in its discretion, notwithstanding any provisions in this chapter to the contrary, allow the person to retain his license to operate a vehicle of another owner in the pursuit of the employment, if the employer-owner of the vehicle has furnished proof of financial responsibility covering the operation of any vehicle which the person may be permitted to operate. The department shall designate the restrictions imposed pursuant to this section on that person's license.

Section 56-4-570. The license, registration, and nonresident's operating privilege, except as otherwise provided in Section 56-4-560, shall remain suspended and may not be renewed nor may any license or registration be thereafter issued in the name of that person, including that person if not previously licensed until every judgment is satisfied in full or to the extent provided in Section 56-4-580 and until the person gives proof of financial responsibility, subject to the exemptions stated in Sections 56-4-540 to 56-4-560 and 56-4-590.

A discharge in bankruptcy following the rendering of any judgment does not relieve the judgment debtor from any of the requirements of this article.

Section 56-4-580. Judgments referred to in this article, for the purpose of this article only, must be considered satisfied:

(1) when fifteen thousand dollars has been credited upon any judgment rendered in excess of that amount because of bodily injury to or death of one person as the result of any one accident;

(2) when, subject to the limit of fifteen thousand dollars because of bodily injury to or death of one person, the sum of thirty thousand dollars has been credited upon any judgments rendered in excess of that amount because of bodily injury to or death of two or more persons as the result of any one accident; or

(3) when five thousand dollars has been credited upon any judgments rendered in excess of that amount because of injury to or destruction of property of others as a result of any one accident.

Payments made in settlement of any claims because of bodily injury, death, or property damage arising from a motor vehicle accident must be credited in reduction of the amounts provided for in this section.

Section 56-4-590. A judgment debtor upon due notice to the judgment creditor may apply to the court in which the judgment was rendered for the privilege of paying the judgment in installments, and the court, in its discretion and without prejudice to any other legal remedies which the judgment creditor may have, may order and fix the amounts and times of payment of the installments.

The department may not suspend a license, registration, or nonresident's operating privilege and shall restore any license, registration, or nonresident's operating privilege suspended following nonpayment of a judgment when the judgment debtor gives proof of financial responsibility and obtains an order permitting the payment of the judgment in installments and while the payment of any installment is not in default.

If the judgment debtor fails to pay any installment as specified by the order, then upon notice of the default the department shall suspend the license, registration, or nonresident's operating privilege of the judgment debtor until the judgment is satisfied, as provided in this article.

Section 56-4-600. When the department, under any law of this State, suspends or revokes the license of a person upon receiving a record of conviction or forfeiture of bail and in all cases where the department suspends or revokes the driver's license of a person under lawful authority possessed by the department, the department shall also suspend the registration for all motor vehicles registered in the name of that person, except that it shall not suspend the registration, unless otherwise required by law, if that person has previously given or shall immediately give and thereafter maintain proof of financial responsibility with respect to all motor vehicles registered by him. The license and registration remain suspended or revoked and may not at any time thereafter be renewed nor may any license be thereafter issued to that person nor may any motor vehicle be thereafter registered in the name of that person until permitted under the motor vehicle laws of this State and not then until he gives and thereafter maintains proof of financial responsibility.

Section 56-4-610. When the department suspends or revokes a nonresident's operating privilege by reason of a conviction or forfeiture of bail, this privilege remains suspended or revoked unless that person has previously given or immediately gives and thereafter maintains proof of financial responsibility.

Section 56-4-620. If a person is not licensed but by final order or judgment is convicted of any offense requiring the suspension or revocation of license, for operating a motor vehicle upon the highways without being licensed to do so, or for operating an unregistered motor vehicle upon the highways, no license may thereafter be issued to that person and no motor vehicle may continue to be registered or thereafter be registered in his name until he gives and thereafter maintains proof of financial responsibility.

Section 56-4-630. Proof of financial responsibility when required under this chapter may be given by filing:

(1) a certificate of insurance as provided in Sections 56-4-640 or 56-4-650;

(2) a bond as provided in Section 56-4-660; or

(3) a certificate of deposit of money or securities as provided in Section 56-4-670.

Section 56-4-640. Proof of financial responsibility may be furnished by filing with the department the written certificate of any insurer authorized to do business in this State certifying that there is in effect a motor vehicle liability policy for the benefit of the person required to furnish proof of financial responsibility. The certificate must give the date of the motor vehicle liability policy, which date must be the same as the effective date of the certificate, and must designate by explicit description or by appropriate reference all motor vehicles covered, unless the policy is issued to a person who is not the owner of a motor vehicle. The policy must be written for a minimum term of one year. A certificate of insurance remains in full force and effect for at least ninety days unless the certificate is canceled by the insurance company for some reason other than nonpayment of premium. If a certificate of insurance is canceled after ninety days for nonpayment of premium, the insurance company issuing the certificate shall immediately notify the department that the reason for the cancellation is for nonpayment of premium. If a certificate of insurance is canceled for any reason other than for nonpayment of premium the insurance company issuing the certificate shall immediately notify the department that the cancellation is not for nonpayment of premium. The department may refuse acceptance of the certificate of insurance required under this section for the following reasons:

(1) if the certificate is filed by an agent or company found to be in violation of any of the provisions of this chapter; or

(2) if the certificate is filed for any person who has previously had a certificate canceled for nonpayment of premium, unless the policy when the certificate is issued is certified to be noncancelable for one year for nonpayment of premium.

No motor vehicle may be or continue to be registered in the name of any person required to file proof of financial responsibility unless the motor vehicle is so designated in the certificate.

Section 56-4-650. The nonresident owner of a motor vehicle not registered in this State may give proof of financial responsibility by filing with the department written certificates of an insurer authorized to transact business in the state in which the motor vehicle, or motor vehicles, described in the certificate is registered or, if the nonresident does not own a motor vehicle, then in the state in which the insured resides, as long as the certificate otherwise conforms with the provisions of this chapter, and the department shall accept it upon condition that the insurance carrier complies with the following provisions with respect to the policies certified:

(1) the insurance carrier executes a power of attorney authorizing the department to accept service on its behalf of notice or process in any action arising out of a motor vehicle accident in this State; and

(2) the insurance carrier agrees in writing that the policies must be construed to conform with the laws of this State relating to the terms of motor vehicle liability policies issued in this State.

If an insurer not authorized to transact business in this State, which has qualified to furnish proof of financial responsibility, defaults in any of these undertakings or agreements, the department may not thereafter accept as proof any certificate of that carrier whether formerly filed or thereafter tendered as proof, so long as the default continues.

Section 56-4-660. Proof of financial responsibility may be evidenced by the bond of a surety company authorized to transact business within this State or a bond with at least two individual sureties, each owning real estate in this State and together having equities equal in value to at least twice the amount of the bond, which real estate must be scheduled in the bond approved by a judge of a court of record, which bond must be conditioned for payment of the amounts specified in Section 56-4-20(13). The bond must be filed with the department and is not cancelable except after ten days' written notice to the department. The bond constitutes a lien in favor of the State upon the real estate scheduled of any surety. The lien exists in favor of any holder of a final judgment against the person who has filed the bond for damages, including damages for care and loss of services, because of bodily injury to or death of any person or for damage because of injury to or destruction of property, including the loss of use thereof, resulting from the ownership, maintenance, use, or operation of a motor vehicle after the bond was filed, upon the filing of notice to that effect by the department in the appropriate office of the county or city where the real estate is located. Any surety scheduling real estate security shall furnish satisfactory evidence of title and the nature and extent of all encumbrances thereon and the value of the surety's interest therein in the manner which the judge of the court of record may require. The notice filed by the department, in addition to other matters which are considered to be pertinent by the department, must contain a legal description of the real estate scheduled, the name of the holder of the record title, the amount for which it stands as security, and the name of the person in whose behalf proof is being made. Upon the filing of the notice, the clerk of court shall retain it as part of the records of the court and enter upon the record the date and hour of filing, the name of the surety, the name of the titleholder of record, the description of the real estate and a notation that a lien is charged on the real estate pursuant to the notice filed under this section.

If a judgment rendered against the principal on the bond is not satisfied within sixty days after it has become final, the judgment creditor may for his own use and benefit and at his sole expense bring an action in the name of the State against the company or persons executing the bond, including an action or proceeding to foreclose any lien that may exist upon the real estate of a person who executed the bond. An action to foreclose any lien upon real estate scheduled by any surety under the provisions of this section may be brought in the same manner as is provided for the foreclosure of real estate mortgages in this State.

Section 56-4-670. Proof of financial responsibility may be evidenced by the certificate of the State Treasurer that the person named therein has deposited with him forty-five thousand dollars in cash or securities such as may legally be purchased by savings banks or for trust funds of a market value of forty-five thousand dollars. The State Treasurer may not accept the deposit and issue a certificate therefor and the department may not accept the certificate unless accompanied by evidence that there are no unsatisfied judgments of any character against the depositor in the county where the depositor resides.

The deposit must be held by the State Treasurer to satisfy, in accordance with the provisions of this chapter, any execution on a judgment issued against the person making the deposit for damages, including damage for care and loss of service, because of bodily injury to or death of any person or for damages because of injury to or destruction of property, including the loss of use thereof, resulting from the ownership, maintenance, use, or operation of a motor vehicle after the deposit was made. Money or securities deposited are not subject to attachment or execution unless the attachment or execution arises out of a suit for damages which this chapter covers.

Section 56-4-680. When a person required to give proof of financial responsibility under this chapter is, or later becomes, an operator in the employ of any owner or is, or later becomes, a member of the immediate family or household of the owner, the department shall accept proof given by the owner in lieu of proof by the other person to permit that person to operate a motor vehicle for which the owner has given proof as provided in this chapter. The department shall designate the restrictions imposed by this section on that person's license.

Section 56-4-690. The department shall consent to the cancellation of any bond or certificate of insurance or the department shall direct and the State Treasurer shall return the money or securities to the person entitled thereto upon the substitution and acceptance of other adequate proof of financial responsibility pursuant to this chapter.

Section 56-4-700. Whenever any proof of financial responsibility filed under the provisions of this chapter no longer fulfills the purposes for which required, the department shall require other proof as required by this chapter and shall suspend the license and registration or the nonresident's operating privilege pending the filing of other proof.

Section 56-4-710. The department, upon request, shall consent to the immediate cancellation of any bond or certificate of insurance, or shall return to the person entitled thereto any money or securities deposited pursuant to this chapter as proof of financial responsibility, or the department shall waive the requirement of filing proof, if:

(1) at any time after five years from the date the proof was required when, during the five-year period preceding the request, the department has not received record of a conviction or a forfeiture of bail which would require or permit the suspension or revocation of the license, registration, or nonresident's operating privilege of the person by or for whom the proof was furnished;

(2) in the event of the death of the person on whose behalf the proof was filed or the permanent incapacity of the person to operate a motor vehicle; or

(3) if the person who has given proof surrenders his license and registration to the department.

The department may not consent to the cancellation of any bond or the return of any money or securities if any action for damages upon a liability covered by the proof is then pending or any judgment upon this liability is then unsatisfied or if the person who has filed the bond or deposited the money or securities has, within one year immediately preceding the request, been involved as an operator or owner in any motor vehicle accident resulting in injury or damage to the person or property of others. An affidavit of the applicant as to the nonexistence of these facts or that he has been released from all liability or has been finally adjudicated not to be liable for the injury or damage is sufficient evidence thereof in the absence of evidence to the contrary in the records of the department.

Section 56-4-720. When a person whose proof has been canceled or returned under Section 56-4-710(3) applies for a license or registration within five years from the date proof was originally required, this application must be refused unless the applicant reestablishes the proof for the remainder of the five-year period.

Article 9

Motor Vehicle Liability Policies

Section 56-4-810. As used in this article:

(1) `Bodily injury' also includes death resulting from an injury to the body;

(2) `Insured', as used in Sections 56-4-850, 56-4-860, 56-4-880, and 56-4-890, means the named insured and, while resident of the same household, the spouse of the named insured and relatives of either, while in a motor vehicle or otherwise, and a person who uses, with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above;

(3) `Uninsured motor vehicle' is a motor vehicle as to which there is no bodily injury liability insurance and property damage liability insurance, both in the amounts specified in Section 56-4-830, or there is the insurance but the insurance company writing it denies coverage thereunder and there is no bond or deposit of cash or securities in lieu of the bodily injury and property damage liability insurance. A motor vehicle is `uninsured' if the owner or operator is unknown.

Section 56-4-820. An owner's policy of liability insurance must designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is granted.

Section 56-4-830. No policy or contract of bodily injury liability insurance or of property damage liability insurance covering liability arising from the ownership, maintenance, or use of any motor vehicle may be issued or delivered in this State to the owner of the vehicle, or may be issued or delivered by any insurer licensed in this State upon any motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the person named therein and any other person, as insured, using any of those motor vehicles with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of the motor vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle, as follows: Fifteen thousand dollars because of bodily injury to or death of one person in any one accident, and, subject to that limit for one person, thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and five thousand dollars because of injury to or destruction of property of others in any one accident.

Section 56-4-840. No policy or contract may be issued or delivered as described in Section 56-4-850 unless it contains an endorsement or provisions undertaking to pay the insured all sums which he is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle within limits which may be no less than the requirements of Section 56-4-830. The endorsement or provisions must also provide for not less than five thousand dollars coverage for injury to or destruction of the property of the insured in any one accident but may provide an exclusion of the first two hundred dollars of the loss or damage. No additional charge may be made to the policyholder for the endorsement. Recovery under the endorsement or provisions is subject to the conditions set forth in Sections 56-4-850 to 56-4-880.

Section 56-4-850. If the owner or operator of any motor vehicle which causes bodily injury or property damage to the insured is unknown, the insured or someone on his behalf, in order for the insured to recover under the endorsement, shall report the accident as required by Sections 56-5-1260 to 56-5-1280.

Section 56-4-860. If the owner or operator of any vehicle causing injury or damages is unknown, an action may be instituted against the unknown defendant as `John Doe' and service of process may be made by delivery of a copy of the motion for judgment or other pleadings to the clerk of the court in which the action is brought and service upon the insurance company issuing the policy must be made as prescribed by law as though the insurance company were a party defendant. The insurance company may file pleadings and take other action allowable by law, in the name of `John Doe'.

Section 56-4-870. An insurer paying a claim under the endorsement or provisions required by Section 56-4-840 is subrogated to the rights of the insured to whom the claim was paid against the person causing the injury, death, or damage to the extent that payment was made, but the bringing of an action against the unknown owner or operator as `John Doe' or the conclusion of this action does not constitute a bar to the insured, if the identity of the owner or operator who caused the injury or damages complained of becomes known, from bringing an action against the owner or operator theretofore proceeded against as `John Doe', and any recovery against that owner or operator must be paid to the insurer to the extent that the insurer paid the named insured in the action brought against the owner or operator as `John Doe', except that the insurer shall pay its proportionate part of any reasonable costs and expenses incurred in connection therewith, including reasonable attorneys' fees. Nothing in an endorsement or provisions made under Section 56-4-840 nor any other provisions of law operate to prevent the joining in an action against `John Doe' of the owner or operator of the motor vehicle causing injury as a party defendant and this joinder is specifically authorized.

Section 56-4-880. No endorsement or provisions required by Section 56-4-840 may contain any provision requiring arbitration of any claim arising under the endorsement or provisions; nor may anything be required of the insured except the establishment of legal liability; nor is the insured restricted or prevented in any manner from employing legal counsel or instituting legal proceedings.

Section 56-4-890. The motor vehicle liability policy must state the name and address of the named insured, the coverage afforded by the policy, the premium charged for the policy, the policy period, and the limits of liability and shall contain an agreement, or must be endorsed, that insurance is provided under the policy in accordance with the coverage defined in this chapter as respects bodily injury and death or property damage, or both, and is subject to all of the provisions of this chapter.

Section 56-4-900. Every motor vehicle liability policy is subject to the following provisions, which need not be contained in the policy:

(1) The liability of the insurer with respect to the insurance required by this chapter becomes absolute whenever injury or damage covered by the motor vehicle liability policy occurs.

(2) The policy may not be canceled or annulled as to the liability by any agreement between the insurer and the insured after the occurrence of the injury or damage.

(3) No statement made by the insured or on his behalf and no violation of the policy defeats or voids the policy.

(4) The satisfaction by the insured of a judgment for the injury or damage is not a condition precedent to the right or duty of the insurer to make payment on account of the injury or damage.

(5) The insurer has the right to settle any claim covered by the policy, and, if the settlement is made in good faith, the amount of the settlement is deductible from the limits of liability specified in Section 56-4-830.

(6) The policy, the written application therefor, if any, and any rider or endorsement which does not conflict with the provisions of this chapter constitute the entire contract between the parties.

Section 56-4-910. The motor vehicle liability policy need not insure any liability under the Workers' Compensation Law nor any liability on account of bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured or while engaged in the operation, maintenance, or repair of the motor vehicle nor any liability for damage to property owned by, rented to, in charge of, or transported by the insured.

Section 56-4-920. Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy, and the excess or additional coverage is not subject to the provisions of this chapter. With respect to a policy which grants this excess or additional coverage the term `motor vehicle liability policy' applies only to that part of the coverage which is required by this article.

Section 56-4-930. Any motor vehicle liability policy may provide:

(1) that the insured shall reimburse the insurer for any payment the insurer would not have been obligated to make under the terms of the policy except for the provisions of this chapter; and

(2) for the prorating of the insurance under the policy with other valid and collectible insurance.

Section 56-4-940. The requirements for a motor vehicle liability policy may be fulfilled by the policies of one or more insurers, which policies together meet the requirements.

Section 56-4-950. Any binder issued pending the issuance of a motor vehicle liability policy must be considered as fulfilling the requirements for the policy.

Section 56-4-960. When an insurer has certified a motor vehicle liability policy under Section 56-4-640 and 56-4-650, the insurance so certified may not be canceled or terminated until at least ten days after a notice of cancellation or termination of the insurance certified is filed with the department, except that a policy subsequently procured and certified, on the effective date of its certification, terminates the insurance previously certified with respect to any motor vehicle designated in both certificates.

Section 56-4-970. This chapter does not apply to or affect policies of automobile insurance against liability which may be required by any other law of this State, and those policies, if they contain an agreement or are endorsed to conform with the requirements of this chapter, may be certified as proof of financial responsibility under this chapter.

Section 56-4-980. This chapter does not apply to or affect policies insuring solely the insured named in the policy against liability resulting from the maintenance or use by the persons in the insured's employ or on his behalf of motor vehicles not owned by the insured.

Article 11

Associated Automobile Insurers

of South Carolina

Section 56-4-1110. As used in this article:

A. `Insurable applicant' means a person who:

(1) (a) is a resident of this State and owns a motor vehicle registered in this State, and

(i) has a valid driver's license, and

(ii) pays the required premium, or

(b) owns a motor vehicle registered in this State and does not operate the vehicle, and pays the required premium, or

(c) is a nonresident of this State and owns an automobile registered or principally garaged in this State and pays the required premium.

(2) named in (1)(a), (b), and (c) above does not qualify as insurable applicants if:

(a) a person who usually drives the motor vehicle does not hold or is not eligible to obtain a driver's license or has a driver's license which is under suspension; or

(b) the person has any unpaid premiums with respect to prior automobile insurance, unless the person has paid the full term premium for coverage at the time coverage is to commence.

B. `Subscriber' means an insurer who is required by the provisions of this article to subscribe to and participate in the AAI.

C. `Commissioner' means the Chief Insurance Commissioner.

D. `Eligible vehicle' means a nonfleet, four-wheel vehicle, not used as a public or livery conveyance, of the private passenger or station wagon type, or a vehicle with load capacity of fifteen hundred pounds or less, or any farm vehicle individually owned and licensed.

E. `All other vehicles' means:

(1) garage risks including nonmotor vehicle insurance when written in combination with automobile liability coverage;

(2) ambulance risks;

(3) commercial risks which have a load capacity less than ten thousand pounds and are not required to have a mandatory filing by a governmental authority other than an SR-22. Pulpwood trucks or dumptrucks are not included under `all other vehicles', regardless of load capacity;

(4) church buses used by a church to transport adults or children to and from services and in activities incidental to church functions; however, a mandatory filing by any governmental authority other than an SR-22 is not required;

(5) privately-owned school buses used to transport school children and students, their parents or guardians, members of the faculty, school board members, nurses, doctors, and dentists, as well as guests in connection with any school activity and operations incidental thereto, including games, outings, and similar road trips; however, a mandatory filing by any governmental authority other than an SR-22 is not required;

(6) buses used by nonprofit organizations which are sponsored in whole or in part by state, federal or local funds and used to transport children or adults in connection with activities or services provided by the nonprofit organizations; however, a mandatory filing by any governmental authority other than an SR-22 is not required.

F. `Participation ratio' means the ratio of the subscriber's premiums or exposure units in the State to the comparable statewide totals for all subscribers. For eligible vehicle insurance the participation ratio must be based upon the net direct automobile insurance car years written in the State for the latest twelve-month period as reported to the statistical agent of each subscriber as eligible vehicle exposures.

For all other automobile insurance, including insurance for fleets, commercial vehicles, and public vehicles, the ratio must be based upon the total automobile liability gross direct premiums written in the State, including policy and membership fees, less dividends paid, less return premiums and premiums on policies not taken, without including reinsurance assumed and without deducting reinsurance ceded, reduced by the amount of these premiums reported as private passenger automobiles nonfleet premiums for the calendar year ending December thirty-first of the second prior year.

Section 56-4-1120. There is created an unincorporated, nonprofit, independent, legal entity to be known as the Associated Automobile Insurers of South Carolina (AAI). Every insurer authorized to write and writing automobile insurance in this State shall become a member of the AAI.

Section 56-4-1130. The AAI shall provide, but may contract with one or more insurers licensed to do automobile insurance business in South Carolina, for the issuance and servicing of automobile insurance policies which are noncancelable and guaranteed renewable so long as the insured remains an insurable applicant, which policies must afford:

A. Automobile liability insurance in the minimum amounts as required under the laws of this State but not to exceed limits equivalent to one hundred thousand dollars a person, three hundred thousand dollars an accident and property damage liability not to exceed twenty-five thousand dollars an accident, and any other coverages required by law or required to be offered by insurers by law.

B. With respect to an eligible vehicle, at the option of the insured, the following:

(1) supplemental first party economic benefits in amounts not exceeding the limits filed for the coverage by AAI, and

(2) automobile physical damage insurance, subject to a deductible of not less than two hundred dollars for each loss under collision coverage, so long as the insurable applicant purchases the coverage specified in Section 56-4-1130. The insured may, at his option, purchase coverage with a deductible of one hundred dollars for an additional premium.

Section 56-4-1140. The AAI, with respect to an eligible vehicle and all other vehicles, shall also provide an optional deferred premium payment plan which includes reasonable installment charges. In the alternative an insurable applicant may utilize the services of a licensed premium finance company.

Section 56-4-1150. Every agent who is authorized to solicit, negotiate, or bind automobile insurance on behalf of any subscriber, and every agent designated by the commissioner pursuant to the laws of this State, is authorized to solicit, negotiate, or bind automobile insurance on behalf of the AAI in accordance with the plan of operation. Every agent, with respect to eligible vehicles and all other vehicles:

A. shall offer to place insurance through the AAI for any insurable applicant and bind coverage if the insurable applicant accepts this offer;

B. is entitled to receive, and any subscriber is required to pay, a commission for placing the insurance through the AAI. For one year following the effective date of this article each agent shall receive as a commission a fee of thirty dollars plus the sum of five percent of the policy premium in excess of three hundred dollars. Thereafter, the rate of commission must be as established by the plan of operation not to exceed a sum in excess of ten percent of the policy premium. AAI business must be excluded from an insurer's performance/incentive plans for its agents.

Section 56-4-1160. Any insured who, at the time of issuance of a policy providing coverage through the AAI, has an accident and violation-free driving record, is entitled to a policy written by any subscriber if that insured provides an official motor vehicle report which reflects an accident and violation-free driving record for not less than twenty-four consecutive months following the date of issuance of the policy. The term `insured' as used in this section includes the insured named in the policy and all regular operators covered by the policy. The initial board of directors for the AAI shall incorporate in the plan of operation a requirement that all persons insured through the AAI must be given notice of this right annually.

Section 56-4-1170. A. Every agent authorized to place business through the AAI, as a condition of that authority, shall advise the applicant of benefits of possible lower rates afforded by other insurers represented by the agent, if any. In addition, the AAI shall notify, at least annually, in writing each person insured through the AAI of benefits of possible lower rates afforded by the normal markets of each subscriber.

B. Every agent authorized to place business through the AAI, as a condition of that authority, shall advise an applicant of the possible benefits of a lower rate, if available, offered through the AAI.

C. The initial board of directors for the AAI shall incorporate in the plan of operation regulations necessary for the administration of this article.

Section 56-4-1180. A. No insurer may refuse to issue or renew a policy of private passenger automobile insurance solely because of age, sex, residence, or marital status of the person seeking coverage. Nor may any insurer refuse to issue or renew a policy of private passenger automobile insurance for any reason due, directly or indirectly, to the race, color, creed, financial status, national origin, or ancestry of the person seeking coverage or solely because another insurer has refused to write or renew a policy in which that person was the name insured. However, rates, rating systems, territories, and classification plans lawfully in use on or after the effective date of this article may be used notwithstanding any other provision of this article.

B. Every insurer, at the written request of any person refused a new or renewed policy, shall specify in writing the reason relied upon by the insurer in refusing to issue or renew a policy of insurance. This response must be made to the person not later than thirty days after receipt of the request.

C. Following the response and upon written application made by the person not later than fifteen days following receipt of the response, the commissioner shall review the facts submitted by the insurer and by the complaining party, make a determination as to whether the provisions of this section have been violated, and advise the parties in writing of his decisions.

D. If the commissioner determines that the person was denied coverage in violation of this article, the person is entitled to coverage written by the insurer wrongfully denying the coverage upon payment of the required premium. If the person was insured through the AAI pending a resolution of the validity of the insurer's decision not to issue or renew coverage, he is entitled to a refund by the insurer of the difference, if any, between the premium paid for coverage through the AAI and the premium he would have paid for coverage written by the insurer during that period. If the commissioner determines that the violation was wilful, he may impose a penalty upon the insurer of not more than one thousand dollars.

E. There is no liability on the part of, and no cause of action of any nature may arise against, any insurer or the commissioner or any of their authorized representatives, agents, or employees for furnishing information in compliance with this article or for the making of any statement pertaining thereto, unless the person asserting the cause of action was motivated by express malice or gross negligence.

F. An order of the commissioner issued pursuant to this section is subject to appeal in accordance with the pertinent provisions of Title 38.

Section 56-4-1190. A. The rates, classifications, rating plans, and rating regulations applicable to the insurance written by the AAI are those filed by the AAI and approved by the commissioner. The rates charged by the AAI are those rates approved by the commissioner in accordance with the provisions of Title 38. The rates may not include a margin for profit, and the expense portion thereof must be reduced by the projected investment income realized on premium and loss reserves. The AAI statewide average rate level before surcharges for all territories and classes combined for the first twenty-four months following the effective date of the article may not be more than ten percent in excess of the comparable statewide average rate level before surcharges for voluntary and involuntary business combined as projected by the rate service organization having the largest number of members and subscribers in South Carolina. This cap applies separately for each coverage for which rates are calculated.

B. Every individual rate is subject to any safe driver discount or surcharge provided for in any merit rating plan promulgated by the commissioner.

Section 56-4-1200. A. If at any time under acceptable accounting and actuarial methods the AAI is producing a profit, the AAI, by action of the board of directors approved by the commissioner, shall make refunds to policyholders or reduce rates.

B. If any at time under acceptable accounting methods and actuarial methods the AAI shows an operating loss, all subscribers of the AAI shall participate in assessments for the operating loss of the AAI in the proportion as defined in Part F of Section 56-4-1110.

C. Neither the assets nor the surplus of a subscribing insurer may be used to finance the operating deficits of the AAI. Assessments for losses of the AAI must be recouped annually by each subscriber and by the AAI by a specific surcharge to be levied upon all policyholders of each subscriber and the policyholders of the AAI. These assessments must be at a percentage adopted by the board of directors and approved by the commissioner. If the amount collected by insurers during the period of surcharge exceeds assessments paid by the subscriber to the AAI, the subscriber shall pay over the excess to the AAI at a date specified by the AAI. If the amount collected during the period of assessments is less than the assessments paid to the AAI by the subscribers, the AAI shall refund the differences. The amount of the recoupment may not be considered premium income subject to state premium tax.

D. The amounts of the recoupments surcharge by each insurer must be filed with the commissioner and made a matter of public record available to anyone.

E. The AAI is exempt from:

(1) Section 38-9-80; and

(2) Chapter 31 of Title 38.

Section 56-4-1210. The AAI shall file in the office of the commissioner on or before March thirty-first of each year a statement which summarizes the transactions, conditions, operations, and affairs of the AAI during the preceding fiscal year ending December thirty-first. The statement must contain matters and information prescribed by the commissioner and be in the form required by the commissioner. The commissioner may at any time require the AAI to furnish to him additional information with respect to its transactions regarding any other matter which the commissioner considers to be material to assist him in evaluating the operation and experience of the AAI.

Section 56-4-1220. The commissioner may from time to time make an examination into the affairs of the AAI and, in undertaking this examination, may hold a public hearing. The expense of the examination must be paid by the AAI.

Section 56-4-1230. The provisions of this section are known as the `plan of operation' and include the following requirements:

A. Insurers required to subscribe to and participate in the AAI, acting through the initial board of directors, shall adopt a plan of operation in accordance with the requirements of this article and file it with the commissioner for his approval within ninety days after the effective date of this article.

B. The plan of operation, unless sooner approved in writing, must be considered as meeting the requirements of this article if it is not disapproved by the commissioner within sixty days from the date of filing. Before the disapproval of any such plan of operations, the commissioner shall issue a notice stating in what respect the plan of operation fails to meet the requirements of this article and fix a date for hearing. All insurers required to subscribe to and participate in the AAI and any other party having a direct interest in it shall have an opportunity to appear in person and by counsel.

C. If no plan of operation is submitted to the commissioner within ninety days from the effective date of this article, the commissioner shall prepare and promulgate a plan of operation in accordance with the requirements of this article which must continue in force until superseded by a plan of operation effective in accordance with the provisions of Parts A and B of this section.

D. On the date the plan of operation becomes effective, the South Carolina Reinsurance Facility shall cease to accept cessions, remaining in existence solely for the purpose of servicing the `run off' of `in force' business.

E. Any amendments to the plan of operation are subject to approval or disapproval of the commissioner as provided in Parts A and B of this section with respect to the initial plan of operation and become effective when adopted by a two-thirds vote of the board of directors of the AAI and upon approval by the commissioner.

Section 56-4-1240. A. Within sixty days after the effective date of this article, the commissioner shall call the first or organizational meeting of the AAI and seat a board of directors. The responsibility of the board includes, but is not limited to, being certain that:

(1) Consumers' interests are protected by:

(a) fair and timely claims handling consistent with provisions of law and policy coverage and the facts of the claim;

(b) fair underwriting and fair pricing according to the provisions of this article;

(c) information availability about AAI coverages and rates;

(d) efficient and low cost operations of the AAI, utilizing automation wherever advantageous and consistent with the objectives of this article.

(2) Subscribers' interests are protected by:

(a) AAI operations on a nonprofit/nonloss basis;

(b) AAI rates which are adequate but not excessive at the break-even operating results level.

(c) AAI operations, including claims-cost monitoring, which are exemplary and representative of the highest performance standards.

B. The initial board consists of fifteen members selected as follows:

(1) two members must be individual public representatives appointed by the Governor, who shall also appoint alternates for each if they cannot serve;

(2) one member must be an individual public representative appointed by the Chairman of the Senate Banking and Insurance Committee, who shall also appoint an alternate if he cannot serve;

(3) one member must be an individual public representative appointed by the Chairman of the Labor, Commerce and Industry Committee of the House of Representatives, who shall also appoint an alternate if he cannot serve;

(4) one member must be an agent who is a member of, and who is selected by, the Independent Insurance Agents of South Carolina;

(5) one member must be an agent who is a member of, and who is selected by, the Carolina Association of Professional Insurance Agents;

(6) two members must be insurers who are members of, and who are selected by, the American Insurance Association;

(7) two members must be insurers who are members of, and who are selected by, the American Mutual Insurance Alliance;

(8) two members must be insurers who are members of, and who are selected by, the National Association of Independent Insurers;

(9) one member must be a domestic insurer who is not affiliated with any of the foregoing organizations and who is elected by the nonaffiliated domestic insurers voting in person or by proxy;

(10) two members must be insurers who are not affiliated with any of the foregoing organizations, one of whom must be a stock insurer and one of whom must be a nonstock insurer, and both of whom are respectively elected by nonaffiliated stock and nonaffiliated nonstock insurers voting in person or by proxy.

Each insurer representative must be represented by an individual officer or employee. Voting for the two unaffiliated representatives and the one domestic representative must be cumulative voting, weighted on the basis of the latest available automobile insurance premium volume in the State and may be by proxy. Any insurers group who is under substantially the same ownership or management must, for voting purposes, be considered to be one member, the character of its group affiliations to be determined by that of the individual member with the largest automobile insurance volume in the State.

A chairman must be selected immediately by the board of directors from the insurer representatives on the board. The initial board of directors shall prepare and submit a plan of operation and shall serve for one year after the effective date of this article.

The plan must provide for the same composition, selection, and voting rights of the permanent board of directors, who must be selected annually and shall serve for one year following the date of their selection. Members of the board of directors present in person or by proxy and representing fifty-one percent or more of the members constitute a quorum at any meeting. When a quorum is present a proposition must be carried by two-thirds of the votes cast in person or by proxy."

SECTION 3. Articles 1, 3, and 5 of Chapter 77, Title 38 of the 1976 Code and Chapters 9 and 10, Title 56 of the 1976 Code are repealed, except that the provisions of those articles and chapters continue to apply until the expiration of automobile insurance policies in effect on the effective date of this act.

SECTION 4. This act takes effect January 1, 1995.

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