1993-94 Bill 3421: Motor vehicle insurance laws - South Carolina Legislature Online

South Carolina General Assembly
110th Session, 1993-1994

Bill 3421

Indicates Matter Stricken
Indicates New Matter

                    Current Status

Introducing Body:               House
Bill Number:                    3421
Primary Sponsor:                Cato
Type of Legislation:            GB
Subject:                        Motor vehicle insurance laws
Residing Body:                  House
Computer Document Number:       BBM/10142JM.93
Introduced Date:                19930204    
Last History Body:              House
Last History Date:              19940518    
Last History Type:              Objection withdrawn by
                                Representative
Scope of Legislation:           Statewide
All Sponsors:                   Cato
Type of Legislation:            General Bill

History

Bill Body Date Action Description CMN Leg Involved ____ ______ ____________ ______________________________ ___ ____________ 3421 House 19940518 Objection withdrawn by Corning Representative 3421 House 19940301 Objection by Representative Simrill Corning Robinson Kelley 3421 House 19940301 Objection withdrawn by Breeland Representative 3421 House 19940301 Objection by Representative Cato 3421 House 19940301 Objection withdrawn by Scott Representative 3421 House 19930603 Objection withdrawn by Inabinett Representative 3421 House 19930512 Objection by Representative Cobb_Hunter White Breeland Scott Inabinett Anderson 3421 House 19930511 Debate adjourned until Wednesday, 19930512 3421 House 19930506 Debate adjourned until Tuesday, 19930511 3421 House 19930422 Committee Report: Favorable 26 with amendment 3421 House 19930210 Referred to Committee 26 3421 House 19930210 Recalled from Committee 25 3421 House 19930204 Introduced, read first time, 25 referred to Committee

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Indicates Matter Stricken
Indicates New Matter

COMMITTEE REPORT

April 22, 1993

H. 3421

Introduced by REP. Cato

S. Printed 4/22/93--H.

Read the first time February 4, 1993.

THE COMMITTEE ON LABOR, COMMERCE AND INDUSTRY

To whom was referred a Bill (H. 3421), to amend the Code of Laws of South Carolina, 1976, by adding Section 38-77-355 so as to provide that in a claim or action for personal injury or wrongful death arising out of the ownership, operation, use, or maintenance of a motor vehicle, etc., respectfully

REPORT:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

Amend the bill, as and if amended, by striking all after the enacting words and inserting:

/SECTION 1. Chapter 77 of Title 38 of the 1976 Code is amended by adding:

"ARTICLE 13

Non-Economic Loss

Section 38-77-1200. As used in this article, unless the context otherwise requires:

(A) `Accidental bodily injury' means bodily injury, sickness, or disease, or death resulting therefrom, arising out of the ownership, operation, or use of a motor vehicle, or while occupying such vehicle, which is accidental as to the person insured.

(B) `Economic loss' means actual pecuniary loss and actual monetary expenses incurred by or on behalf of an injured person as the result of an accidental bodily injury consisting only of medical expense, work loss, replacement services loss, and death benefits.

(C) `Injured person' means a person who sustains accidental bodily injury when eligible for benefits under a policy of automobile insurance. The term also includes, where appropriate, the personal representative of an estate.

(D) `Intentional misconduct' means conduct whereby harm is intentionally caused or attempted to be caused by one who acts or fails to act for the purpose of causing harm or with knowledge that harm is substantially certain to follow when such conduct caused or substantially contributed to the harm claimed for. A person does not intentionally cause or attempt to cause harm (1) merely because his or her act or failure to act is done with the realization that it creates a grave risk of causing harm or (2) if the act or omission causing bodily harm is for the purpose of averting bodily harm to oneself or another person.

(E) `Motor vehicle' is defined by Section 38-77-30(7).

(F) `Noneconomic loss' means any loss other than economic loss and includes, but is not necessarily limited to, pain, suffering, inconvenience, physical impairment, mental anguish, emotional pain and suffering, hedonic damages, and loss of any of the following: earning capacity, consortium, society, companionship, comfort, protection, marital care, parental care, filial care, attention, advice, counsel, training, guidance, or education. Noneconomic loss does not include economic loss caused by pain and suffering or by physical impairment.

(G) `Occupying' means to be in or upon a motor vehicle or engaged in the immediate act of entering into or alighting from the motor vehicle.

(H) `Operation or use' means operation or use of a motor vehicle as a motor vehicle, including, incident to its operation or use as a vehicle, occupying it. Operation or use of a motor vehicle does not cover conduct within the course of a business of manufacturing, selling, or maintaining a motor vehicle, including repairing, servicing, washing, loading, or unloading, nor does it include such conduct not within the course of such a business, unless such conduct occurs while occupying a motor vehicle.

(I) `Owner' means the person or persons, other than a lienholder or secured party, who owns or has title to a motor vehicle or is entitled to the use and possession of a motor vehicle subject to a security interest held by another person. Owner does not include (i) a lessee under a lease not intended as security, or (ii) the United States of America or any agency thereof, except with respect to motor vehicles for which it has elected to provide insurance.

(J) `Permanent' means an injury whose effects cannot be eliminated by further time for recovery or by further treatment and care, including surgery.

(K) `Person' includes an organization, public or private.

(L) `Replacement services loss' means expenses reasonably incurred in obtaining ordinary and necessary services from others, not members of the injured person's household, in lieu of those the injured person would have performed for the benefit of the household. Replacement services loss does not include any loss incurred after the death of an injured person, and the disability period shall not exceed two years from the date of the accident.

(M) `Serious' means only an injury which has a substantial bearing on the injured person's ability to resume substantially all of his normal activities and lifestyle.

(N) `Serious bodily injury' means an accidental bodily injury which results in death, serious and permanent loss of an important bodily function, permanent and serious bodily injury determined objectively within reasonable medical probability, or serious and permanent disfigurement.

Section 38-77-1210. In any action of tort brought against the owner, registrant, operator, or occupant of a motor vehicle with respect to which a policy of automobile insurance as defined in Section 38-77-30(1) is applicable, or against any person or organization legally responsible for his acts or omissions, a plaintiff may recover damages in tort for pain, suffering, mental anguish, and inconvenience because of bodily injury, sickness, or disease arising out of the ownership, maintenance, operation, or use of such motor vehicle only in the event that the injury reaches one of the following thresholds:

(1) the injury or disease consists in whole or in part of permanent and serious disfigurement;

(2) permanent and serious bodily injury, determined objectively, within reasonable medical probability;

(3) permanent and serious loss of an important bodily function;

(4) the actual economic loss exceeds the policy limits of the at-fault party; or

(5) death.

Section 38-77-1220. The provisions of this article are not applicable if the motor vehicle operator was driving under the influence of alcohol or illegal drugs or is guilty of intentional misconduct.

Section 38-77-1230. In any action where the defendant contends that the plaintiff's injury does not meet the standards set forth in Section 38-77-1210, either party may seek summary judgment on that issue. If a motion is made, the court may determine at least thirty days before the date set for trial whether there is a material issue of fact as to whether the injury meets the standards of Section 38-77-1210 or if not, render summary judgment in accordance with the undisputed facts. If the facts regarding the nature of the injury are undisputed, the question as to whether or not the facts render the injury as meeting the standards of Section 38-77-1210 is a question of law to be decided by the court. In any action to be tried before a jury where the defendant contends the plaintiff's injury is not a serious and permanent injury but the defendant concedes or the court determines that there is a material issue of fact as to whether the plaintiff's injury meets the standards of Section 38-77-1210 then, upon motion of the defendant, that issue shall be separately tried and no other evidence as to plaintiff's noneconomic loss shall be received until that issue has been resolved. After resolution of that issue, the amount of the plaintiff's noneconomic loss may be tried before the same jury or a different jury, as the court may in its discretion decide."

SECTION 2. Section 38-77-280 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:

"Section 38-77-280. (A) Except as provided in subsection (B), all automobile insurers, including those insurance companies writing private passenger physical damage coverages only, shall may make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage.

If collision coverage is offered or provided, it must have a mandatory deductible of two hundred fifty dollars, but an insured or qualified applicant, at his option, may select an additional deductible in appropriate increments up to one thousand dollars.

If comprehensive coverage or fire, theft, and combined additional coverages is offered or provided, it must have a mandatory deductible of two hundred fifty dollars, but an insured, at his option, may select an additional deductible in appropriate increments up to one thousand dollars. This deductible does not apply to auto safety glass. It is an unfair trade practice, as described in Section 38-57-30 and 38-57-40, for an insurer or an agent to sell collision insurance, comprehensive coverage, or fire, theft, and combined additional coverages unless the insured is notified at the time of application of the savings which may be realized if the applicant or the insured selects a higher deductible. This notice is required only at the time of the initial sale and must be in a form approved by the Chief Insurance Commissioner. An insurer may offer insureds lower deductibles at the insurer's option.

(B) Notwithstanding subsection (A) and Section 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 an applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or another 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 an applicant or existing policyholder, on renewal, who has collected benefits provided under 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. Automobile insurers may refuse to write for private passenger automobiles physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage, for an applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or another operator not excluded in accordance with Section 38-77-340 and who resides in the same household, which does not qualify for the safe driver discount in Section 38-73-760e.

All insurers subject to the provisions of this section writing single interest collision coverage shall provide an applicant for the insurance at the time of his application a notice separate and apart from any other form used in the application. The notice must be signed by the applicant evidencing his acknowledgment of having read the notice. The notice must contain the following language printed in bold face type:

`NOTICE: THE INSURANCE COVERAGE YOU ARE HEREBY PURCHASING IS ONLY SINGLE INTEREST COLLISION COVERAGE. THE AMOUNT OF INSURANCE DECREASES AS YOU PAY OFF THE AMOUNT OF YOUR INDEBTEDNESS. YOU MAY NOT RECEIVE ANY INSURANCE PROCEEDS OVER AND ABOVE THE AMOUNT OF THE OUTSTANDING BALANCE ON YOUR LOAN.'

(C) Notwithstanding Section 38-77-110, automobile physical damage coverage in an automobile insurance policy may be canceled at any time during the policy period by reason of the factors or conditions described in Section 38-73-455(A) or Section 38-77-280(B) which existed before the commencement of the policy period and which were not disclosed to the insurer at the commencement of the policy period.

(D) No policy of insurance which provides automobile physical damage coverage may be ceded to the facility.

(E) Insurers of automobile insurance may charge a rate for physical damage insurance coverages different than from those provided for in Section 38-73-457 if the rates are filed and approved by the Chief Insurance Commissioner. Any applicant or existing policyholder, to be charged this different rate, must be denied the coverage pursuant to subsection (B) at the rate provided in Section 38-73-457.

In determining the premium rates to be charged on automobile insurance, it is unlawful to consider race, color, creed, religion, national origin, ancestry, location of residence, occupation, or economic status.

(G) An insurer or agent shall provide written notice to the insured of the reason or reasons the insured was not written at the base rate.

(H) The Chief Insurance Commissioner shall compile a comparative statistical analysis of the persons for whom physical damage coverages are written and of the persons for whom physical damage coverages are denied indicating the data for the following categories: race; sex; occupation; income; and geographical territory. This report must be furnished on an annual basis to the General Assembly."

SECTION 3. Section 38-73-1425 of the 1976 Code, as added by Act 113 of 1991, is amended to read:

"Section 38-73-1425. The final rate or premium charge for a private passenger automobile insurance risk ceded to the facility which does not qualify for the safe driver discount in Section 38-73-760(e) is the final rate or premium charge required by Section 38-73-1420 or the final rate or premium charge approved for use by the insurer, whichever is greater, so that the facility may not be unreasonably utilized by automobile insurers ceding business pursuant to Section 38-77-950.

The establishing of a rate for all business ceded to the facility shall be phased in over a two-year period so that no less than fifty percent of the current differential of the company-filed rate and the current facility rate shall be added on renewals or new business effective on or after October 1, 1993, and the remaining fifty percent differential between the company-filed rate and the facility rate shall be added on renewals or new business effective on or after October 1, 1994."

SECTION 4. Section 38-73-455 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:

"Section 38-73-455. (A) An automobile insurer shall offer two four different rates for automobile insurance, a base rate as defined in Section 38-73-457 and an objective standards rate which is twenty-five percent above the base rate liability coverages, uninsured motorist coverages, and underinsured motorist coverages. Both All of these rates are subject to all surcharges or discounts, if any, applicable under any approved merit rating plan, credit, or discount plan promulgated or approved by the commissioner.

(B) No later than July 1, 1994, insurers of automobile insurance must file with the commissioner revised rates for private passenger automobile insurance policies written by them. Each insurer must file:

(1) a `preferred' rate by driver classification and territory, which is a rate less than the standard rate defined herein. This rate applies to private passenger automobile insurance risks which qualify for the safe driver discount; and

(2) a `standard' rate which must be the approved base rate as defined in Section 38-73-457, by driver classification and territory in effect on July 1, 1994. This rate applies to private passenger automobile insurance risks which qualify for the safe driver discount; and

(3) a `nonpreferred' rate by driver classification and territory, which is a rate more than the standard rate but less than the rate by driver classification and territory for the substandard rate and is applicable to all private passenger automobile insurance risks; and

(4) a `substandard' rate by driver classification and territory, which is a rate more than the nonpreferred rate but less than or equal to the highest rate by driver classification and territory for the facility, and is applicable to all private passenger automobile risks.

(C) The commissioner must approve the rates filed pursuant to subsection (A). If the rates are approved, the rates shall become effective for all policies of automobile insurance issued or renewed with effective dates on or after October 1, 1994.

(D) Insurers may place any automobile insurance risk at any of the four rate levels without restriction unless provided otherwise in this chapter. An insurer or agent shall provide written notice to the insurer of the tier at which coverage is being written for the insured and the reasons the insured was written in that particular tier. However, the Uniform Merit Rating Plan must continue to apply to all risks written by them. (E) An applicant and all operators of the insured automobile who have qualified for the safe driver discount for the last five years and who reside in the same household, and the automobile or the automobile it replaced has been insured for liability coverage for the past twelve months must be written at the preferred or standard rate and may not be ceded to the facility. A driver who is claimed as a dependent for income tax purposes is not required to meet the five year requirement as long as the dependent qualifies for the safe driver discount.

(F) An applicant and all operators of the insured automobile who have qualified for the safe driver discount for the last ten years and who reside in the same household and the automobile or the automobile it replaced has been insured for liability coverage for the past twelve months must be written at the preferred rate and may not be ceded to the facility. A driver who is claimed as a dependent for income tax purposes is not required to meet the ten year requirement as long as the dependent qualifies for the safe driver discount.

(G) All policies of automobile insurance issued or renewed with effective dates on or after October 1, 1994, that are written by automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, and all policies ceded to the facility by automobile insurers must be written at the rates provided for in Section 38-77-1426. However, the Uniform Merit Rating Plan must apply to all such risks.

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:

(1) has obtained a policy of automobile insurance or continuation thereof through material misrepresentation within the preceding thirty-six months; or

(2) has had convictions for driving violations on three or more separate occasions within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Department of Highways and Public Transportation; or

(3) has had two or more `chargeable' accidents within the thirty-six months immediately preceding the effective date of coverage. A `chargeable' accident is defined as one resulting in bodily injury to any person in excess of three hundred dollars per person, death, or damage to the property of the insured or other person in excess of seven hundred fifty dollars. Accidents occurring under the circumstances enumerated below are not considered chargeable.

(a) The automobile was lawfully parked. An automobile rolling from a parked position is not considered as lawfully parked but is considered as operated by the last operator.

(b) The applicant or other operator or owner was reimbursed by or on behalf of a person responsible for the accident or has a judgment against this person.

(c) The automobile of an applicant or other operator was struck in the rear by another vehicle and the applicant or other operator has not been convicted of a moving traffic violation in connection with the accident.

(d) The operator of the other automobile involved in the accident was convicted of a moving traffic violation and the applicant or other operator was not convicted of a moving traffic violation in connection therewith.

(e) An automobile operated by the applicant or other operator is damaged as a result of contact with a `hit and run' driver, if the applicant or other operator so reports the accident to the proper authority within twenty-four hours or, if the person is injured, as soon as the person is physically able to do so.

(f) Accidents involving damage by contact with animals or fowl.

(g) Accidents involving physical damage, limited to an caused by flying gravel, missiles, or falling objects.

(h) Accidents occurring as a result of the operation of any automobile in response to an emergency if the operator at the time of the accident was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency. This exception does not include an accident occurring after the emergency situation ceases or after the private passenger motor vehicle ceases to be used in response to the emergency; or

(4) has had one `chargeable' accident and two convictions for driving violations, all occurring on separate occasions, within the thirty-six months immediately preceding the effective date of coverage as reflected by the motor vehicle record of each insured driver as maintained by the Department of Highways and Public Transportation; or

(5) has been convicted of or forfeited bail during the thirty-six months immediately preceding the effective date of coverage for operating a motor vehicle while in an intoxicated condition or while under the influence of drugs; or

(6) has been convicted or forfeited bail during the thirty-six months immediately preceding the effective date for:

(a) any felony involving the use of a motor vehicle,

(b) criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle,

(c) leaving the scene of an accident without stopping to report,

(d) theft or unlawful taking of a motor vehicle,

(e) operating during a period of revocation or suspension of registration or license,

(f) Knowingly permitting an unlicensed person to drive,

(g) reckless driving,

(h) the making of material false statements in the application for licenses or registration,

(i) impersonating an applicant for license or registration or procuring a license or registration through impersonation, whether for himself or another,

(j) filing of a false or fraudulent claim or knowingly aiding or abetting another in the presentation of such a claim,

(k) failure to stop a motor vehicle when signaled by means or a siren or flashing light by a law enforcement vehicle; or

(7) has for thirty or more consecutive days during the twelve months immediately preceding the effective date of coverage, owned or operated the automobile to be insured (or if newly acquired, the automobile it replaces) without liability coverage in violation of the laws of this State; or

(8) has used the insured automobile as follows or if the insured automobile is:

(a) used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool must not be considered use of an automobile for hire or compensation,

(b) used in the business of transportation of flammables or explosives,

(c) used in illegal operation, or

(d) no longer principally used and garaged within the State, but not to include students who are operating a motor vehicle registered in this State while attending an institution located in another state.

(B) In the event that one or more of the conditions or factors prescribed in items (1) through (8) of subsection (A) exist, the motor vehicle customarily operated by that individual must be written at the objective standards rate.

(C) (H) Member companies of an affiliated group of automobile insurers may not utilize different filed rates for automobile insurance coverages which they are mandated by law to write. For the purpose of this section, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control. Those automobile insurers designated pursuant to Section 38-77-590(a), for automobile insurance risks written by them through producers designated by the Facility governing board pursuant to that section, shall utilize the rates or premium charges by coverage filed and authorized for use by the rating organization licensed by the Commissioner pursuant to Article 11, Chapter 73 of this title, which has the largest number of members or subscribers for automobile insurance rates. However, those automobile insurers designated pursuant to Section 38-77-590(a) are not required to use those same rates or premium charges described in the preceding sentence for risks written by them through their authorized agents not appointed pursuant to Section 38-77-590.

(D) (I) An automobile insurance policy may be endorsed at any time during the policy period to reflect the correct rate or premium applicable by reason of the factors or conditions described in subsection (A) which existed prior to the commencement of the policy period in which the endorsement is made, regardless of whether the factors or conditions were known or disclosed to the insurer at the commencement of the policy period. However, no No policy may be endorsed during a policy period to reflect factors or conditions occurring during that policy period. A policy may be endorsed during a policy period to recognize the addition or deletion of an operator or vehicle.

(E)(J) For purposes of determining the applicable rates to be charged an insured, an automobile insurer shall obtain and review an applicant's motor vehicle record.

(K) In determining the premiums to be charged on automobile insurance, it is unlawful to consider race, religion, national origin, or economic status."

SECTION 5. The 1976 Code is amended by adding:

"Section 38-77-175. (A) When the operator or owner of an individual private passenger automobile as defined in Section 38-77-30(5.5) is issued a traffic ticket for a moving violation by a law enforcement officer, he must be furnished a written request form to be completed by him and his insurance company or the agent issuing the policy to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the Department of Highways and Public Transportation.

(B) The completed and verified form must be returned by the operator or owner to the local law enforcement agency issuing the traffic ticket within fifteen days from the date he receives it. Failure to return the form verified in the proper manner is prima facie evidence that the vehicle was uninsured.

(C) The director of the motor vehicle division of the department shall waive the reinstatement fee or per diem fine, or both, imposed upon the owner or operator of the motor vehicle pursuant to this section for his failure to complete and return the insurance verification form if he has liability insurance coverage when determined to be uninsured by the department. The director shall document his reasons for waiving the fees or fines in the records of the department.

(D) No person knowingly may furnish or aid another in the submission of false or misleading information in the completed and verified form. A person who knowingly furnishes or aids another in submitting false or misleading information regarding the verification of liability insurance is subject to the penalties in Section 56-10-260.

(E) This section applies only to owners and operators of motor vehicles registered under the laws of South Carolina.

(F) Motor vehicles determined to be uninsured under this section are subject to Sections 56-10-240 and 56-10-245.

(G) The operator of the motor vehicle shall present the written request form for verification of liability insurance coverage to the owner of the vehicle. Failure by the operator to give the form to the owner is prima facie evidence that the operator knowingly furnished false and misleading information to the department.

However, the form must have the following sentence on its face in bold type, all capitals, and large print:

`THE OWNER OR OPERATOR OF A MOTOR VEHICLE WHO IS ISSUED THIS FORM SHALL COMPLETE AND RETURN THE FORM TO THE ISSUING AGENCY WITHIN FIFTEEN DAYS OR IS SUBJECT TO A TWO HUNDRED DOLLAR REINSTATEMENT FEE AND FIVE DOLLAR A DAY FINE PURSUANT TO SOUTH CAROLINA LAW. IF YOU ARE NOT THE OWNER OF THE MOTOR VEHICLE, YOU SHALL PRESENT THIS FORM TO THE OWNER OR YOU ARE SUBJECT TO FINE AND IMPRISONMENT.'

The officer shall read aloud this sentence to the owner or operator of the motor vehicle upon furnishing the written request form to verify liability insurance coverage."

SECTION 6. The 1976 Code is amended by adding:

"Section 56-7-12. (A) When the operator or owner of an individual private passenger automobile as defined in Section 38-77-30(5.5) is issued a traffic ticket for a moving violation by a law enforcement officer, he must be furnished a written request form to be completed by him and his insurance company or the agent issuing the policy to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the Department of Highways and Public Transportation.

(E) This section applies only to owners and operators of motor vehicles registered under the laws of South Carolina.

(F) Motor vehicles determined to be uninsured under this section are subject to Sections 56-10-240 and 56-10-245.

However, the form must have the following sentence on its face in bold type, all capitals, and large print:

The officer shall read aloud this sentence to the owner or operator of the motor vehicle upon furnishing the written request form to verify liability insurance coverage."

SECTION 7. Section 56-10-45 of the 1976 Code is amended to read:

"Section 56-10-45. (A) For the purpose of recovering motor vehicle registration plates as required by Section 56-10-40 of the 1976 Code, the department may must contract with or make working arrangements with local law enforcement agencies including sheriffs and municipal law enforcement departments for them to confiscate these plates, upon a contract or working arrangement being agreed to. The local law enforcement agencies are authorized to confiscate these plates. The local law enforcement agencies must be paid for this service in the manner agreed upon between them and the executive director from funds of the department which are to be used for this purpose.

(B) The department shall collect the reinstatement fee as provided in Section 56-10-240 and the per diem fine as provided in Section 56-10-245 upon the reinstatement of tags confiscated by local law enforcement agencies pursuant to this section. The local city, county, or municipal governing body of the local law enforcement agency collecting the registration plate must be paid by the department fifty percent of the reinstatement fee and fifty percent of the per diem fine collected for each registration plate confiscated by the local agency.

(C) The Executive Director of the Department of Highways and Public Transportation or his designee shall monthly provide information to local law enforcement agencies, upon request of the local law enforcement agency, on uninsured vehicles."

SECTION 8. The 1976 Code is amended by adding:

"Section 56-10-35. The department shall, on a daily basis, select a computerized random sample of five hundred of the registered vehicles in this State and mail to the owners a written request form to be completed by them and their insurance company or the agent issuing the policy to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the Department of Highways and Public Transportation. The completed and verified form must be returned by the owner to the department within fifteen days from the date he receives it. Failure to return the form verified in the proper manner is prima facie evidence that the vehicle was uninsured. Motor vehicles determined to be uninsured under this section are subject to Section 56-10-240 and 56-10-245."

SECTION 9. No later than October 1, 1994, all insurers shall submit rate filings that must reflect the rate decreases, if any, attributable to Section 6 of this act.

SECTION 10. Except as otherwise specifically provided herein, this act takes effect October 1, 1993./

Amend title to conform.

THOMAS C. ALEXANDER, for Committee.

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-77-355 SO AS TO PROVIDE THAT IN A CLAIM OR ACTION FOR PERSONAL INJURY OR WRONGFUL DEATH ARISING OUT OF THE OWNERSHIP, OPERATION, USE, OR MAINTENANCE OF A MOTOR VEHICLE, THE COURT SHALL ADMIT INTO EVIDENCE THE TOTAL AMOUNT PAID TO THE CLAIMANT FROM COLLATERAL SOURCES; TO AMEND SECTION 38-77-280, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE AND TO COLLISION AND COMPREHENSIVE COVERAGE, SO AS TO DELETE THE CURRENT PROVISIONS AND PROVIDE THAT NOTWITHSTANDING CERTAIN SECTIONS, AFTER A CERTAIN DATE AUTOMOBILE INSURERS MAY REFUSE TO WRITE OR RENEW PRIVATE PASSENGER AUTOMOBILE PHYSICAL DAMAGE INSURANCE COVERAGE; TO AMEND SECTION 38-77-30, AS AMENDED, RELATING TO THE DEFINITION OF "DAMAGES" UNDER THE AUTOMOBILE INSURANCE LAWS, SO AS TO PROVIDE THAT THE TERM INCLUDES ACTUAL DAMAGES ONLY; TO AMEND SECTION 38-77-140, RELATING TO AUTOMOBILE INSURANCE AND BODILY INJURY AND PROPERTY DAMAGE LIMITS, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT AN INSURER SHALL ALSO OFFER THE INSURED A RIDER OR ENDORSEMENT FOR AN ADDITIONAL PREMIUM TO COVER LIABILITY FOR PUNITIVE DAMAGES; TO AMEND SECTION 38-77-150, RELATING TO AUTOMOBILE INSURANCE, THE UNINSURED MOTORIST PROVISION, AND DEFENSE OF AN ACTION BY THE INSURER, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT INSURERS SHALL OFFER, AT THE OPTION OF THE INSURED, HIGHER LIMITS OF UNINSURED MOTORIST COVERAGE IN ACCORDANCE WITH SECTION 38-77-350; TO AMEND SECTION 38-77-160, AS AMENDED, RELATING TO ADDITIONAL UNINSURED MOTORIST COVERAGE, AND UNDERINSURED MOTORIST COVERAGE, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT AUTOMOBILE INSURERS SHALL OFFER ON A FORM PRESCRIBED BY THE CHIEF INSURANCE COMMISSIONER, AT THE OPTION OF THE INSURED IN ACCORDANCE WITH SECTION 38-77-350 UNDERINSURED MOTORIST COVERAGE UP TO THE LIMITS SELECTED FOR THE INSURED'S LIABILITY COVERAGE TO PROVIDE COVERAGE IN THE EVENT THE INSURED BECOMES LEGALLY ENTITLED TO COLLECT DAMAGES FROM THE OWNER OR OPERATOR OF AN UNDERINSURED MOTOR VEHICLE; TO AMEND SECTION 56-9-350, RELATING TO SECURITY FOLLOWING MOTOR VEHICLE ACCIDENTS, VERIFICATION OF INSURANCE COVERAGE FORM TO BE ISSUED FOLLOWING CERTAIN ACCIDENTS, EFFECT OF FAILURE TO RETURN THE FORM, AND UNINVESTIGATED ACCIDENTS, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT WITHIN FIFTEEN DAYS AFTER AN ACCIDENT A WRITTEN REPORT OF THE ACCIDENT MUST BE FORWARDED TO THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION ON A FORM PRESCRIBED BY THE DEPARTMENT; TO AMEND SECTION 56-10-10, RELATING TO MOTOR VEHICLE REGISTRATION AND FINANCIAL SECURITY AND THE SECURITY REQUIRED ON REGISTERED VEHICLES, SO AS TO DELETE CERTAIN PROVISIONS AND PROVIDE, AMONG OTHER THINGS, THAT SECURITY MUST BE MAINTAINED ON EVERY MOTOR VEHICLE REQUIRED TO BE REGISTERED IN SOUTH CAROLINA WHERE THE OWNERS OR OTHER OPERATORS NOT EXCLUDED IN ACCORDANCE WITH SECTION 38-77-340 RESIDE IN THE SAME HOUSEHOLD AND ARE INSUREDS UNDER THE SAME POLICY, IF ONE OF THE OWNERS OR OTHER OPERATORS DO NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT; TO AMEND SECTION 56-10-220, RELATING TO THE REQUIREMENT THAT A MOTOR VEHICLE SOUGHT TO BE REGISTERED MUST BE INSURED AND PROOF OF THE SAME, SO AS TO DESCRIBE THE PERSON APPLYING FOR REGISTRATION AS ONE "REQUIRED TO PROVIDE SECURITY ON A MOTOR VEHICLE AS PROVIDED IN SECTION 56-10-10"; TO AMEND SECTION 56-10-240, RELATING TO THE REQUIREMENT THAT UPON THE LOSS OF AUTOMOBILE INSURANCE THE INSURED MUST OBTAIN NEW INSURANCE OR SURRENDER THE REGISTRATION AND LICENSE PLATES, SO AS TO FURTHER DESCRIBE THE MOTOR VEHICLE WHICH IS THE SUBJECT OF THIS SECTION AS ONE "FOR WHICH SECURITY IS REQUIRED AS PROVIDED IN SECTION 56-10-10", DELETE CERTAIN LANGUAGE, AND DESCRIBE THE RESIDENT FOR WHOM LAPSE OR TERMINATION OCCURS AFTER THREE MONTHS AS ONE "WHO DOES NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT IN SECTION 38-73-760"; TO AMEND CHAPTER 10, TITLE 56, RELATING TO MOTOR VEHICLE REGISTRATION AND FINANCIAL SECURITY, BY ADDING ARTICLE 5 SO AS TO PROVIDE FOR THE REGISTRATION AND LICENSING OF UNINSURED MOTOR VEHICLES; TO AMEND SECTION 38-77-110, AS AMENDED, RELATING TO THE PROVISION THAT AUTOMOBILE INSURERS ARE REQUIRED TO INSURE AND EXCEPTIONS, SO AS TO, AMONG OTHER THINGS, PROVIDE THAT NO INSURER IS REQUIRED TO WRITE OR RENEW PRIVATE PASSENGER AUTOMOBILE INSURANCE IF THE RISK DOES NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT, PROVIDE THAT NO INSURER MAY REFUSE TO WRITE OR RENEW A POLICY, COVERAGE, OR ENDORSEMENT OF AUTOMOBILE INSURANCE BECAUSE OF THE RACE, COLOR, CREED, NATIONAL ORIGIN, ANCESTRY, OR INCOME OF ANYONE WHO SEEKS TO BECOME INSURED, AND PROVIDE THAT AN APPLICANT DENIED COVERAGE MUST BE PROVIDED IN WRITING BY THE DENYING INSURER THE REASON OR REASONS FOR WHICH THE APPLICANT HAS BEEN REFUSED INSURANCE BY THAT INSURER, AT THE TIME OF THE DENIAL; TO AMEND THE 1976 CODE BY ADDING ARTICLE 13 TO CHAPTER 77 OF TITLE 38, SO AS TO ESTABLISH THE SOUTH CAROLINA JOINT UNDERWRITING ASSOCIATION (JUA), INCLUDING PROVISIONS FOR, AMONG OTHER THINGS, THE ABOLITION OF THE SOUTH CAROLINA REINSURANCE FACILITY; TO AMEND SECTION 38-73-455, AS AMENDED, RELATING TO AUTOMOBILE INSURANCE RATES, SO AS TO, AMONG OTHER THINGS, DELETE CERTAIN PROVISIONS, PROVIDE THAT AN AUTOMOBILE INSURER SHALL OFFER FOUR, RATHER THAN TWO, DIFFERENT RATES FOR AUTOMOBILE INSURANCE, AND PROVIDE THAT, NO LATER THAN NINETY DAYS AFTER THE PASSAGE OF THIS ACT, INSURERS OF AUTOMOBILE INSURANCE MUST FILE WITH THE CHIEF INSURANCE COMMISSIONER REVISED RATES FOR ALL OTHER PRIVATE PASSENGER AUTOMOBILE INSURANCE POLICIES WRITTEN BY THEM; TO AMEND SECTION 38-73-760, AS AMENDED, RELATING TO THE STATE RATING AND STATISTICAL DIVISION FOR INSURANCE PURPOSES AND UNIFORM STATISTICAL PLANS, SO AS TO PROVIDE THAT NO SURCHARGE MAY BE ASSESSED FOR THE FIRST CONVICTION OF SPEEDING LESS THAN TWENTY-FIVE MILES PER HOUR IF THE PERSON CONVICTED HAS MAINTAINED THE SAFE DRIVER DISCOUNT FOR THE PREVIOUS THREE YEARS, AND PROVIDE THAT NO SURCHARGE MAY BE ASSESSED FOR CONVICTIONS OF CERTAIN VIOLATIONS OCCURRING ON OR AFTER A CERTAIN DATE; TO AMEND SECTION 56-10-270, RELATING TO THE OPERATION OF AN UNINSURED MOTOR VEHICLE AND PENALTIES, SO AS TO, AMONG OTHER THINGS, CHANGE THE PENALTIES, INCLUDING PROVIDING FOR THE PERFORMANCE OF PUBLIC SERVICE HOURS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-116 SO AS TO PROVIDE THAT, UPON ISSUANCE OF A NEW PRIVATE PASSENGER AUTOMOBILE INSURANCE POLICY, THE INSURANCE COMPANY OR AGENT MUST REVIEW WITH THE NEW APPLICANT A LIST OF DRIVING OFFENSES AND THE RELATED FINE AND PUNISHMENT, AS WELL AS THE POSSIBLE INCREASE IN THE INSURANCE RATES, THE EFFECT OF ANY SURCHARGES, OR THE EFFECT OF THE LOSS OF THE SAFE DRIVER DISCOUNT, AND PROVIDE THAT THE LIST MUST BE ON A FORM APPROVED BY THE CHIEF INSURANCE COMMISSIONER AND MUST ACCOMPANY THE POLICY; TO PROVIDE THAT, AFTER A CERTAIN DATE, THE GOVERNING BOARD OF THE JOINT UNDERWRITING ASSOCIATION SHALL CONTRACT WITH ONE OR MORE INSURERS OR BUSINESS ENTITIES TO SERVE AS THE DESIGNATED CARRIER AND SHALL ESTABLISH A PROCEDURE FOR THE SELECTION OF THE DESIGNATED CARRIER, PROVIDE THAT COMMISSIONS PAID TO AGENTS FOR POLICIES CEDED TO OR PLACED IN THE JUA SHALL BE SET BY THE JUA'S BOARD OF DIRECTORS, AND PROVIDE FOR RELATED MATTERS; TO AMEND THE 1976 CODE BY ADDING SECTION 38-77-175 AND 56-7-12 SO AS TO PROVIDE THAT, WHEN THE OPERATOR OR OWNER OF A MOTOR VEHICLE IS ISSUED A TRAFFIC TICKET FOR A MOVING VIOLATION BY A LAW ENFORCEMENT OFFICER, HE MUST BE FURNISHED A WRITTEN REQUEST FORM TO COMPLETE TO VERIFY LIABILITY INSURANCE COVERAGE, PROVIDE FOR THE RETURN OF THE COMPLETED AND VERIFIED FORM TO THE DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION, PROVIDE FOR THE DEPOSIT OF SUCH COLLECTED FINES, AND PROVIDE FOR RELATED MATTERS; TO REPEAL ARTICLE 5, CHAPTER 77, TITLE 38, RELATING TO THE SOUTH CAROLINA REINSURANCE FACILITY AND DESIGNATED PRODUCERS, SECTION 38-73-1420, RELATING TO THE REQUIREMENT THAT THE BOARD OF GOVERNORS OF THE REINSURANCE FACILITY SHALL FILE AN EXPENSE COMPONENT FOR PRIVATE PASSENGER AUTOMOBILE INSURANCE RATE OR PREMIUM CHARGES, SECTION 38-73-1425, RELATING TO THE PROVISION THAT THE FINAL RATE OR PREMIUM CHARGE FOR A PRIVATE PASSENGER AUTOMOBILE INSURANCE RISK CEDED TO THE REINSURANCE FACILITY WHICH DOES NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT IS THE FINAL RATE OR PREMIUM CHARGE REQUIRED BY SECTION 38-73-1420 OR THE FINAL RATE OR PREMIUM CHARGE APPROVED FOR USE BY THE INSURER, WHICHEVER IS GREATER, SECTION 38-77-285, RELATING TO THE REQUIREMENT THAT ALL AUTOMOBILE INSURANCE COVERAGES MUST BE IN ONE POLICY AND EXCEPTIONS, SECTION 38-77-920, RELATING TO THE PROVISION THAT AUTOMOBILE INSURERS AND AGENTS MAY NOT REFUSE ACCEPTANCE OF INSURANCE, PROPERTY RIGHTS OF CERTAIN AGENTS, AND RESTRICTION OF MAILINGS TO CERTAIN AREAS, SECTION 38-77-940, RELATING TO THE AUTOMOBILE INSURANCE LAW, AVOIDING CERTAIN CLASSES OR TYPES OF RISKS, EXCEPTIONS, AND CANCELING AN AGENT'S REPRESENTATION, SECTION 38-77-950, RELATING TO UNREASONABLE OR EXCESSIVE USE OF THE REINSURANCE FACILITY BY AN INSURER AND NOTICE TO AN AUTOMOBILE INSURANCE POLICYHOLDER THAT HIS POLICY IS IN THE FACILITY, AND SECTION 38-77-960, RELATING TO AUTOMOBILE INSURANCE AGENT'S BUSINESS; TO AMEND SECTION 38-77-111, RELATING TO THE COVERAGES OF AN AUTOMOBILE INSURANCE POLICY WHICH MAY BE CEDED TO THE REINSURANCE FACILITY AND THOSE COVERAGES WHICH CANNOT BE CEDED, SO AS TO DELETE THE REFERENCE TO THE FACILITY, REPLACE IT WITH THE "JOINT UNDERWRITING ASSOCIATION", AND ALLOW A CESSION EXCEPTION, WITH RESPECT TO COVERAGES UNDER A POLICY THAT AN AUTOMOBILE INSURER IS NOT MANDATED BY LAW TO WRITE, FOR TORT LIABILITY COVERAGE AND UNINSURED MOTORIST COVERAGE FOR THOSE RISKS THAT DO NOT QUALIFY FOR THE SAFE DRIVER DISCOUNT; AND TO PROVIDE A SEVERABILITY CLAUSE.

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

SECTION 1. Article 3, Chapter 77, Title 38 of the 1976 Code is amended by adding:

"Section 38-77-355. (A) In a claim or action for personal injury or wrongful death arising out of the ownership, operation, use, or maintenance of a motor vehicle, the court shall admit into evidence the total amount paid to the claimant from collateral sources, and the court shall instruct the jury to deduct from its verdict the value of all benefits received by the claimant from collateral sources.

(B) For purposes of this section, `collateral sources' means payments made to the claimant, or on his behalf, by or pursuant to:

(1) automobile liability, uninsured motorist, underinsured motorist, or automobile accident insurance that provides health benefits or income disability coverage;

(2) personal protection benefits paid or payable by law;

(3) payments made from a policy of automobile insurance by or on behalf of a joint tortfeaser, either by way of settlement or judgment.

(C) No claimant may make claim or demand, no court may order payment, and no insurer may pay by way of settlement, covenant not to sue, or trust or loan agreement for an item of damages to the extent that the claimant has already received, or will receive, reimbursement for that item as a result of a collateral source payment as defined in this section."

SECTION 2. Section 38-77-280 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:

"Section 38-77-280. (A) Except as provided in subsection (B), all automobile insurers, including those insurance companies writing private passenger physical damage coverages only, shall make collision coverage and either comprehensive or fire, theft, and combined additional coverage available to an insured or qualified applicant who requests the coverage.

Collision coverage must have a mandatory deductible of two hundred fifty dollars, but an insured or qualified applicant, as his option, may select an additional deductible in appropriate increments up to one thousand dollars.

Comprehensive coverage or fire, theft, and combined additional coverages must have a mandatory deductible of two hundred fifty dollars, but an insured, at his option, may select an additional deductible in appropriate increments up to one thousand dollars. This deductible does not apply to auto safety glass. It is an unfair trade practice, as described in Sections 38-57-30 and 38-57-40, for an insurer or an agent to sell collision insurance, comprehensive coverage, or fire, theft, and combined additional coverages unless the insured is notified at the time of application of the savings which may be realized if the applicant or the insured selects a higher deductible. This notice is required only at the time of the initial sale and must be in a form approved by the Chief Insurance Commissioner. An insurer may offer insureds lower deductibles at the insurer's option.

(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 an 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. Automobile insurers may refuse to write for private passenger automobiles comprehensive physical damage, collision, fire, theft, and combined additional coverage, for an applicant or existing policyholder, on renewal, for a motor vehicle customarily operated by an individual, either the named insured or another operator not excluded in accordance with Section 38-77-340 and who resides in the same household, which does not qualify for the safe driver discount in Section 38-73-760(e).

(C) Notwithstanding Section 38-77-110, automobile physical damage coverage in an automobile insurance policy may be canceled at any time during the policy period by reason of the factors or conditions described in Section 38-73-455(A) or Section 38-77-280(B) which existed before the commencement of the policy period and which were not disclosed to the insurer at the commencement of the policy period.

(D) No policy of insurance which provides automobile physical damage coverage only may be ceded to the facility.

(E) Insurers of automobile insurance may charge a rate for physical damage insurance coverages different than those provided for in Section 38-73-457 if the rates are filed and approved by the Chief Insurance Commissioner. Any applicant or existing policyholder, to be charged this different rate, must be denied the coverage pursuant to subsection (B) at the rate provided in Section 38-73-457.

(F) A carrier may not cede collision coverage, comprehensive coverage, or fire, theft, and combined additional coverages with a deductible of less than two hundred fifty dollars. An insured or qualified applicant may select an additional deductible in appropriate increments up to one thousand dollars. However, the mandatory deductible does not apply to safety glass. Notwithstanding Sections 38-77-110 and 38-77-920, after September 30, 1994, automobile insurers may refuse to write or renew private passenger automobile physical damage insurance coverage, including automobile comprehensive physical damage, collision, fire, theft, and combined additional coverage for an applicant or existing policyholder. After September 30, 1994, no private passenger automobile physical damage insurance coverage may be ceded to the Facility."

SECTION 3. Section 38-77-30(4) of the 1976 Code is amended to read:

"(4) `Damages' includes both actual and punitive damages only."

SECTION 4. Section 38-77-140 of the 1976 Code is amended to read:

"Section 38-77-140. (A) No automobile insurance policy may be issued or delivered in this State to the owner of a motor vehicle or may be issued or delivered by an 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 persons defined as insured against loss from the liability imposed by law for actual damages arising out of the ownership, maintenance, or use of these 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 one person in any one accident, and, subject to the limit for one person, thirty thousand dollars because of bodily injury to 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. Nothing in this article prevents an insurer from issuing selling, or delivering a policy providing liability coverage in excess of these requirements.

(B) An insurer shall also offer the insured, in accordance with Section 38-77-350, a rider or endorsement for an additional premium to cover such liability for punitive damages. The insured has the option of accepting or refusing coverage for punitive damages.

As a result of passage of this section, all insurers offering bodily injury liability coverage shall file with the Chief Insurance Commissioner, not later than ninety days after the effective date of this act, revised premium rates for bodily injury liability coverage to be effective on automobile insurance policies issued or renewed with effective dates on or after January 1, 1995. The revised rates must be approved by the commissioner and reflect a reduction in the currently approved premium rate for this coverage of at least one and one-half percent. Insurers shall file with the commissioner not later than sixty days after the effective date of this act premium charges for the punitive damages loss coverage. The premium rate for this coverage shall become effective for the automobile insurance policies issued or renewed with effective dates on or after January 1, 1995, and may not be approved if it is more, when combined with the reduced premium rate for the new bodily injury liability coverage with limitations on the recovery of punitive damages, than the bodily injury liability premium rate for that insurer on the effective date of this act; however, after December 31, 1995, an insurer may apply to the Chief Insurance Commissioner for a rate adjustment for such coverage, based on its actual experience."

SECTION 5. Section 38-77-150 of the 1976 Code is amended to read:

"Section 38-77-150. (A) No automobile insurance policy or contract may be issued or delivered unless it contains a provision by endorsement or otherwise, herein referred to as the uninsured motorist provision, undertaking to pay the insured all sums which he is legally entitled to recover as actual damages from the owner or operator of an uninsured motor vehicle, within limits which may be are no less than the requirements of Section 38-77-140 and no more than the insured's bodily injury and property damage liability limits. The uninsured motorist provision shall also provide for no 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.

(B) Automobile insurers shall offer, at the option of the insured and in the manner hereinafter described, higher limits of uninsured motorist coverage in accordance with Section 38-77-350. The offer of higher limits must be made in connection with every initial application for an automobile insurance policy by including a written explanation of the coverage and inquiry of the applicant, in a form prescribed by the Chief Insurance Commissioner, as to whether the applicant desires to purchase uninsured motorist coverage with limits greater than the mandatory coverages described in subsection (A). No such explanation or inquiry need be made with respect to any renewal, replacement, reinstatement, substitute, or modification of the policy. An insured may, at any time and subject to the limits of this section, specifically request in writing uninsured motorist coverage limits greater than that provided on the current or any prior policy.

(C) Insurers shall offer on a form prescribed by the Chief Insurance Commissioner `nonstackable' policies of uninsured motorist coverage containing policy provisions establishing that if the insured accepts this offer:

(1) Regardless of the number of vehicles involved, persons covered, number of premiums paid, or vehicles or premiums shown on the policy or policies under which the insured might otherwise be entitled to benefits, the coverage provided as to two or more motor vehicles under the same or different policies may not under any circumstances be added together, combined with, or stacked to determine the limit of insurance coverage available to an injured person for any one accident, except as provided in item (3) of this subsection (C).

(2) If at the time of the accident the injured person is occupying a motor vehicle, the uninsured motorist coverage available to him is the coverage available as to that motor vehicle.

(3) If the injured person is occupying a motor vehicle which is not owned by him or by a family member residing with him, he is entitled to the highest limits of uninsured motorist coverage afforded for any one vehicle as to which he is named insured. Such coverage is excess over the coverage on the vehicle he is occupying.

(4) The uninsured motorist coverage provided by the policy does not apply to the named insured who is injured while occupying any vehicle owned by the named insured for which uninsured motorist coverage was not purchased.

(5) If at the time of the accident the injured person is not occupying a motor vehicle, he is entitled to select any one limit of uninsured motorist coverage for any one vehicle afforded by a policy under which he is insured as a named insured.

(6) In connection with the offer authorized by this subsection, insurers shall inform the named insured, applicant, or lessee, on a form prescribed by the Chief Insurance Commissioner, of the limitations imposed under this subsection and that such coverage is an alternative to coverage without such limitations. If this form is signed by a named insured, applicant, or lessee, it is conclusively presumed that there was an informed, knowing acceptance of such limitations, and neither the insurance company nor the insurance agent has any liability to the insured for the insured's failure to purchase stackable coverage. When the named insured, applicant, or lessee has initially accepted such limitations, the acceptance applies to any policy which renews, extends, changes, supersedes, reinstates or replaces an existing policy unless the named insured requests deletion of the limitations and pays the appropriate premium for the coverage. Any insurer who provides coverage which includes the limitations provided in this subsection shall file revised premium rates with the Department of Insurance for such uninsured motorist coverage to take effect before initially providing such coverage. The revised rates must reflect the anticipated reduction in loss costs attributable to such limitations but, in any event, must reflect a reduction in the uninsured motorist coverage premium of at least fifteen percent for policies with such limitations. Insurers shall file within ninety days after the effective date of this act, revised premium rates with the Chief Insurance Commissioner to be effective on automobile insurance policies issued or renewed with effective dates on or after January 1, 1995.

(D) Premium rates made by insurers for uninsured motorist coverage must be determined and regulated as premium rates for automobile insurance generally are determined and regulated. The Chief Insurance Commissioner may prescribe shall approve the form to be used in providing uninsured motorist coverage and when prescribed and promulgated no other form may be used.

(E) No action may be brought under the uninsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the uninsured motorist provision. The insurer has the right to appear and defend in the name of the uninsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record.

(F) Benefits paid pursuant to this section are subject to subrogation and assignment."

SECTION 6. Section 38-77-160 of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"Section 38-77-160. (A) Automobile insurance carriers insurers shall offer on a form prescribed by the Chief Insurance Commissioner, at the option of the insured in accordance with Section 38-77-350 uninsured underinsured motorist coverage up to the limits of the insured's liability coverage in addition to the mandatory coverage prescribed by Section 38-77-150. Such carriers shall also offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at fault insured or underinsured motorist. If, however, an insured or named insured is protected by uninsured or underinsured motorist coverage in excess of the basic limits, the policy shall provide that the insured or named insured is protected only to the extent of the coverage he has on the vehicle involved in the accident. If none of the insured's or named insured's vehicles is involved in the accident, coverage is available only to the extent of coverage on any one of the vehicles with the excess or underinsured coverage. up to the limits selected for the insured's liability coverage to provide coverage in the event the insured becomes legally entitled to collect damages from the owner or operator of an underinsured motor vehicle, as defined in Section 38-77-30(14). The maximum liability of the insurer under the underinsured motorist coverage provided is the lesser of: (1) the difference between the limit of underinsured motorist coverage and the amount paid or payable to the insured by or for any person or organization who is held legally liable for the bodily injury or property damage, or (2) the amount of damages sustained, but not recovered. In no event may the liability of the insurer under such coverage be more than the limits of underinsured motorist coverage provided.

(B) An insured entitled to benefits under an uninsured motorist provision is not entitled to benefits under an underinsured motorist provision. An insured entitled to benefits under an underinsured motorist provision is not entitled to benefits under an uninsured motorist provision.

(C) Insurers shall offer on a form prescribed by the Chief Insurance Commissioner `nonstackable' policies of underinsured motorist coverage containing policy provisions establishing that if the insured accepts this offer:

(2) If at the time of the accident the injured person is occupying a motor vehicle, the underinsured motorist coverage available to him is the coverage available as to that motor vehicle.

(3) If the injured person is occupying a motor vehicle which is not owned by him or by a family member residing with him, he is entitled to the highest limits of underinsured motorist coverage afforded for any one vehicle as to which he is named insured. Such coverage is excess over the coverage on the vehicle he is occupying.

(4) The underinsured motorist coverage provided by the policy does not apply to the named insured who is injured while occupying any vehicle owned by the named insured for which underinsured motorist coverage was not purchased.

(5) If at the time of the accident the injured person is not occupying a motor vehicle, he is entitled to select any one limit of underinsured motorist coverage for any one vehicle afforded by a policy under which he is insured as a named insured.

(6) In connection with the offer authorized by this subsection, insurers shall inform the named insured, applicant, or lessee, on a form prescribed by the chief insurance commissioner, of the limitations imposed under this subsection and that such coverage is an alternative to coverage without such limitations. If this form is signed by a named insured, applicant, or lessee, it is conclusively presumed that there was an informed, knowing acceptance of such limitations, and neither the insurance company nor the insurance agent has any liability to the insured for the insured's failure to purchase stackable coverage. When the named insured, applicant, or lessee has initially accepted such limitations, the acceptance applies to any policy which renews, extends, changes, supersedes, reinstates or replaces an existing policy unless the named insured requests deletion of the limitations and pays the appropriate premium for the coverage.

(D) If an insured is entitled to uninsured motorist or underinsured motorist coverage under more than one policy the maximum amount the insured may recover may not exceed the highest limit of such coverage provided for any one vehicle under any one policy. If more than one policy applies, the following is the order of priority: (1) a policy covering a motor vehicle occupied by the injured person at the time of the accident; (2) a policy covering a motor vehicle not involved in the accident under which the injured person is named insured; (3) a policy covering a motor vehicle not involved in the accident under which the injured person is an insured other than a named insured. Coverage available under a lower priority policy applies only to the extent it exceeds the coverage of a higher priority policy. The underinsured motorist coverage does not apply to bodily injury, sickness, or death of an insured while occupying a motor vehicle owned by, furnished, or available for the regular use of the insured, a resident spouse, or resident relative, if such motor vehicle is not described in the policy under which a claim is made, or is not a newly acquired or replacement vehicle covered under the terms of the policy.

(E) Underinsured motorist Benefits benefits paid pursuant to this section are not subject to subrogation and assignment.

(F) No action may be brought under the underinsured motorist provision unless copies of the pleadings in the action establishing liability are served in the manner provided by law upon the insurer writing the underinsured motorist provision. The insurer has the right to appear and defend in the name of the underinsured motorist in any action which may affect its liability and has thirty days after service of process on it in which to appear. The evidence of service upon the insurer may not be made a part of the record. In the event the automobile insurance insurer for the putative at-fault insured chooses to settle in part the claims against its insured by payment of its applicable liability limits on behalf of its insured, the underinsured motorist insurer may assume control of the defense of action for its own benefit. No underinsured motorist policy may contain a clause requiring the insurer's consent to settlement with the at-fault party.

Insurers offering uninsured motorist coverage must file with the commissioner no more than ninety days after the effective date of this act revised premium rates for this coverage to be effective on all policies of automobile insurance containing such coverage issued on or renewed with effective dates on or after January 1, 1995. The revised rate must be approved by the commissioner and reflect a reduction in the currently approved premium rate for this coverage of at least eighteen percent; provided, however, that after December 31, 1995, an insurer may apply to the Chief Insurance Commissioner for a rate adjustment for such coverage, based on its actual experience. In the first year following such reductions, an insurer may apply to the Chief Insurance Commissioner for a rate adjustment, based on its actual experience, and include consideration of the time value of money."

SECTION 7. Section 56-9-350 of the 1976 Code is amended to read:

"Section 56-9-350. The operator or owner of a motor vehicle involved in an accident resulting in property damage of four hundred dollars or more or in bodily injury or death, must be furnished a written request form at the time of the accident, or as soon after the accident as possible, by the investigating officer for completion and verification of liability insurance coverage, the form to be in a manner prescribed by the Department.

The completed and verified form must be returned by the operator or owner to the Department within fifteen days from the date the form was delivered by the officer. Failure to return the form, verified in the proper manner, is prima facie evidence that the vehicle was uninsured.

The operator or owner of a motor vehicle involved in an accident resulting in property damage of four hundred dollars or more, or in bodily injury or death, which was not investigated by a law enforcement officer shall furnish to the Department a written report and verification of liability insurance coverage, the proof to be in a manner prescribed by the Department within fifteen days after the accident, shall forward a written report of the accident to the department on a form prescribed by the department. The report must contain information to enable the department to determine whether the requirements for the deposit of security under Section 56-9-351 are inapplicable by reason of the existence of insurance or other exceptions specified in this title. Failure to file the report, in the proper verified manner, is prima facie evidence that the vehicle was not registered in compliance with this title."

SECTION 8. Section 56-10-10 of the 1976 Code is amended to read:

"Section 56-10-10. Every owner of a motor vehicle required to be registered in this State shall maintain the security required by Section 56-10-20 with respect to each such motor vehicle owned by him throughout the period the registration is in effect. Security must be maintained on every motor vehicle required to be registered in this State where the owners or other operators not excluded in accordance with Section 38-77-340, reside in the same household and are insureds under the same policy, if one of the owners or other operators do not qualify for the safe driver discount in Section 38-73-760(E). Such security must be maintained with respect to each such motor vehicle owned by him throughout the period the registration is in effect. No certificate of registration may be issued or transferred to an owner by the executive director unless the owner or prospective owner produces satisfactory evidence that the security is in effect, including the name of the owner's automobile liability insurer, the name of the agent, the identification number of the insurance policy, and the effective dates of the policy, except in cases where other security is approved."

SECTION 9. Section 56-10-220 of the 1976 Code is amended to read:

"Section 56-10-220. Every person required to provide security on a motor vehicle as provided in Section 56-10-10 applying for registration for a motor vehicle shall at the time of such registration and licensing declare the vehicle to be an insured motor vehicle under the penalty set forth in Section 56-10-260 and shall execute and furnish to the department his certificate that such motor vehicle is an insured motor vehicle and that he will maintain insurance thereon during the registration period. The certificate must be in the form prescribed by the department. The department may require any registered owner or any applicant for registration and licensing of a motor vehicle declared to be an insured motor vehicle to submit a certificate of insurance executed by an authorized agent or representative of an insurance company authorized to do business in this State. Such certificate must also be in a form prescribed by the department."

SECTION 10. Section 56-10-240 of the 1976 Code is amended to read:

"Section 56-10-240. If, during the period for which it is licensed, a motor vehicle for which security is required as provided in Section 56-10-10 is or becomes an uninsured motor vehicle, then the vehicle owner immediately shall obtain insurance on the vehicle or within five days after the effective date of cancellation or expiration of his liability insurance policy surrender the motor vehicle license plates and registration certificates issued for the motor vehicle. If five working days after the last day to pay an automobile liability insurance premium, whether it is the premium due date or a grace period that is granted customarily or contractually a motor vehicle is an uninsured motor vehicle, the insurer shall give written notice, or notice by magnetic or electronic media in a manner considered satisfactory to the department, within ten days after the five-day period ends, in addition to that notice previously given in accordance with law, by delivery under United States Post Office bulk certified mail, return receipt requested, to the department of the cancellation or refusal to renew under the following circumstances:

(1) the lapse or termination of such insurance or security occurs within three months of issuance provided that this subsection only applies to new policies, and not renewal or replacement policies; or

(2) the lapse or termination occurs after three months for a resident who fails one or more of the objective standards prescribed in Section 38-73-455 who does not qualify for the safe driver discount in Section 38-73-760(E). The department may, in its discretion, authorize insurers to utilize alternative methods of providing notice of cancellation of or refusal to renew to the department. The department may not reissue registration certificates and license plates for that vehicle until satisfactory evidence has been filed by the owner or by the insurer who gave the cancellation or refusal to renew notice to the department that the vehicle is insured. Upon receiving information to the effect that a policy is canceled or otherwise terminated on a motor vehicle registered in South Carolina, the department shall suspend the license plates and registration certificate and shall initiate action as required within fifteen days of the notice of cancellation to pick up the license plates and registration certificate. A person who has had his license plates and registration certificate suspended by the department, but who at the time of suspension possesses liability insurance coverage sufficient to meet the financial responsibility requirements as set forth in this chapter, has the right to appeal the suspension immediately to the Chief Insurance Commissioner. If the commissioner determines that the person has sufficient liability insurance coverage, he shall notify the department, and the suspension is voided immediately. The department shall give notice by first class mail of the cancellation or suspension of registration privileges to the vehicle owner at his last known address. However, when license plates are surrendered pursuant to this section, they must be held at the department office in the county where the person who surrenders the plates resides.

If the vehicle owner unlawfully refuses to surrender the suspended items as required in this article, the department through its designated agents or by request to a county or municipal law enforcement agency may take possession of the suspended license plates and registration certificate and may not reissue the registration until proper proof of liability insurance coverage is provided and until the owner has paid a reinstatement fee of two hundred dollars for the first refusal under this section, and three hundred dollars for each subsequent refusal. A person who voluntarily surrenders his license plates and registration certificate before their suspension shall only be charged a reinstatement fee of five dollars.

A person wilfully failing to return his motor vehicle license plates and registration certificates as required in this section is guilty of a misdemeanor and, upon conviction, must be punished as follows:

(1) for a first offense, fined not less than one hundred dollars nor more than two hundred dollars or imprisoned for thirty days;

(2) for a second offense, fined two hundred dollars or imprisoned for thirty days, or both;

(3) for a third and subsequent offense, imprisoned for not less than forty-five days nor more than six months.

Only convictions which occurred within ten years including and immediately preceding the date of the last conviction constitute prior convictions within the meaning of this section."

SECTION 11. Chapter 10, Title 56 of the 1976 Code is amended by adding:

"Article 5

Registration and Licensing of

Uninsured Motor Vehicles

Section 56-10-510. As used in this article:

(1) `Conviction' 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 38-77-140, 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 56-9-60; 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, and (c) the owner has not qualified as a self-insurer.

(4) `Department' is the South Carolina Department of Highways and Public Transportation.

Section 56-10-520. In addition to any other fees prescribed by law, every person registering and licensing an uninsured motor vehicle, as defined in Section 56-10-510, in this State shall pay, at the time of registering and licensing an uninsured motor vehicle, the sum of two hundred and fifty 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. Every person knowingly operating an uninsured motor vehicle pursuant to this section shall not be deemed in violation of Section 56-10-270.

Section 56-10-530. 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 56-10-260 whether or not each motor vehicle is an insured motor vehicle as defined in Section 56-10-510 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 56-9-60, (b) has given bond or delivered the cash or securities as provided in Sections 56-9-570 and 56-9-580, respectively, or (c) pay the fee prescribed in Section 56-10-520.

Section 56-10-560. All funds collected by the department under the provisions of this article 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 56-10-570 to 56-10-590.

Section 56-10-570. 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 article by the department and for reducing the operating losses of the Reinsurance Facility as provided in Section 56-10-580. As determined by the commissioner, when the recoupment fee is no longer necessary to pay for losses incurred by the facility as a result of the phasing out of the facility as provided for by Section 38-77-1310, the fund must be paid out for financing of driver safety measurers and for enforcing the uninsured motorist laws of the state as determined by the General Assembly.

Section 56-10-580. The Chief Insurance Commissioner annually, prior to September 30 of each year, 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 article. These payments may be made on a quarterly basis.

(2) to the Reinsurance Facility to reduce the operating losses of the Facility for the twelve month period in which they are collected and to reduce the recoupment charges prescribed in Section 38-77-1310 assessed to drivers with the safe driver discount.

(3) to finance driver safety measures and enforce the uninsured motorist laws of the state as determined by the General Assembly, when the recoupment fee is no longer necessary to pay for losses incurred by the Facility, determined by the commissioner, as a result of the phasing out of the Facility as provided for by Section 38-77-1310.

Section 56-10-590. The Chief Insurance Commissioner may promulgate regulations necessary to implement the provisions of this article.

Section 56-10-610. This article does not repeal any other provision contained in this title, but is cumulative to such other provisions."

SECTION 12. Section 38-77-110(A) of the 1976 Code, as last amended by Act 148 of 1989, is further amended to read:

"(A) Automobile insurers other than insurers designated and approved as specialized insurers by the commissioner may not refuse to write or renew automobile insurance policies for individual private passenger automobiles if the risk qualifies for the safe driver discount in Section 38-73-760(e) or small commercial risks. These policies may not be canceled except for reasons which had they existed or been known when the policy was written would have rendered the risk not an insurable risk. Every automobile insurance risk constitutes an insurable risk unless the operator's permit of the named insured has been revoked or suspended and is at the time of application for insurance so revoked or suspended. However, no insurer is required to write or renew automobile insurance on any risk if there exists a valid and enforceable outstanding judgment secured by an insurer, an agent, or licensed premium service company on account of automobile insurance premiums which the applicant or insured or any principal operator who is a member of the named insured's household has failed or refused to pay unless the applicant or insured pays in advance the entire premium for the full term of the policy sought to be issued or renewed or the annual premium, whichever is the lesser. No insurer is required to write or renew private passenger automobile insurance if the risk does not qualify for the safe driver discount in Section 38-73-760(e). An insurer is not precluded from effecting cancellation of an automobile insurance policy, either upon its own initiative or at the instance of an agent or licensed premium service company, because of the failure of any named insured or principal operator to pay when due any automobile insurance premium or any installment payment. However, notice of cancellation for nonpayment of premium notifies the person to whom the notice is addressed that the notice is void and ineffective if payment of the full amount of the premium or premium indebtedness, whichever is the greater, is made to the insurer, agent, or licensed premium service company named in the notice by the otherwise effective date of cancellation. This notice of cancellation is not considered ineffective for being conditional, ambiguous, or indefinite."

SECTION 13. Section 38-77-110(C) of the 1976 Code, as added by Act 148 of 1989, is amended to read:

"(C) With regard to any coverage not required to be written by an insurer under the mandate to write, no No insurer may refuse to write or renew such policy, coverage, or endorsement of automobile insurance because of the race, color, creed, national origin, or ancestry, or income of anyone who seeks to become insured."

SECTION 14. Section 38-77-110 of the 1976 Code, as last amended by Act 148 of 1989, is further amended by adding:

"(D) An applicant denied coverage must be provided in writing by the denying insurer the reason or reasons for which the applicant has been refused insurance by that insurer, at the time of the denial."

SECTION 15. Chapter 77 of Title 38 of the 1976 Code is amended by adding:

"Article 13

Joint Underwriting Association

Section 38-77-1310. (A) The Reinsurance Facility is abolished effective October 1, 1994. There is created the South Carolina Joint Underwriting Association. The administration of the phase out of the Facility is transferred to the Joint Underwriting Association.

(B) As of July 1, 1996, the Facility recoupment charge must not be included in the rate or premium charged by the insurers of private passenger automobile insurance to drivers who qualify for the safe driver discount. If any losses are incurred as a result of the operation of the Facility, the losses attributable to the Facility must be distributed among insured drivers as provided in subsection (C) until the commissioner determines all of the losses have been accounted for, unless provided otherwise.

(C) Consistent with subsection (B), the rate or premium charged by insurers of private passenger automobile insurance must include a recoupment charge, which must be added to the appropriate rate to compensate for any remaining losses incurred by the Facility as a result of its operation. The operating losses of the Facility for a twelve-month period must be recouped in the subsequent twelve-month period.

(1) Prior to December first of each year, the governing board shall calculate the recoupment amount, by coverage, by dividing the net Facility operating loss, adjusted to reflect prudently incurred expenses, consistent with the provisions of Section 38-73-465, and the time value of money, by mandated coverage for the preceding Facility accounting year, by the total number of earned car years in South Carolina, by coverage, for the same period of time. .368 multiplied by the recoupment is to be borne by risks having zero surcharge points under the Uniform Merit Plan promulgated by the commissioner. The remainder of the recoupment (.614 multiplied by the recoupment) represents R in the formula P1X +2P2X +3P3X + 4P4X + 5P5X + 6P6X + 7P7X + 8P8X + 9P9X + 10P10X = R. In this formula to be utilized in determining the Facility recoupment charge:

(a) P1 is the percentage of risks which have one surcharge point under the Uniform Merit Rating Plan;

(b) P2 is the percentage of risks which have two surcharge points under the Uniform Merit Rating Plan;

(d) P4 is the percentage of risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan;

(e) P5 is the percentage of risks subject to a surcharge of five points under the Uniform Merit Rating Plan;

(f) P6 is the percentage of risks subject to a surcharge of six points under the Uniform Merit Rating Plan;

(g) P7 is the percentage of risks subject to a surcharge of seven points under the Uniform Merit Rating Plan;

(h) P8 is the percentage of risks subject to a surcharge of eight points under the Uniform Merit Rating Plan;

(i) P9 is the percentage of risks subject to a surcharge of nine points under the Uniform Merit Rating Plan;

(j) P10 or more is the percentage of risks subject to a surcharge of ten or more points under the Uniform Merit Rating Plan;

(k) X is the dollar amount by coverage, to be charged all risks having one surcharge point under the Uniform Merit Rating Plan promulgated by the commissioner. This dollar amount, by coverage, is the Facility recoupment charge to be added to the rate for all risks which have one surcharge point.

(2) The Facility recoupment charge by coverage to be added to the rate for all risks which have one surcharge point under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of one.

(3) The Facility recoupment charge by coverage to be added to the rate for all risks which have two surcharge points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of two.

(4) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of three points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of three.

(5) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of four points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of four.

(6) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of five points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of five.

(7) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of six points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of six.

(8) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of seven points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of seven.

(9) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of eight points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of eight.

(10) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of nine points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of nine.

(11) The Facility recoupment charge by coverage to be added to the rate for all risks which are subject to a surcharge of ten or more points under the Uniform Merit Rating Plan is calculated by multiplying X by a factor of ten.

(12) In determining the number of surcharge points a risk has for the purposes of this section, no surcharge points assigned under the Uniform Merit Rating Plan because the principal operator of the automobile has not been licensed in any state for at least one year immediately preceding the writing of the risk or as a result of a failure of any motor vehicle equipment requirement may be considered.

(13) This section applies to all private passenger automobile insurance policies.

Section 38-77-1330. As used in this article:

(1) `Association' means the South Carolina Joint Underwriting Association established pursuant to this article.

(2) `Net direct premiums' means gross direct premiums written on automobile liability insurance as computed by the Chief Insurance Commissioner less return premiums or the unused or unabsorbed portions of premium deposits.

Section 38-77-1340. (A) A joint underwriting association is created consisting of all automobile insurers licensed to write within this State automobile insurance policies. Every such insurer is and must remain a member of the association as a condition of its authority to continue to transact this kind of insurance in this State.

(B) The purpose of the association is to provide automobile insurance on a self-supporting basis to the fullest extent possible.

Section 38-77-1350. The association has the power on behalf of its members to make agreements among themselves with respect to the equitable apportionment among them of insurance which may be afforded applicants who are in good faith entitled to or have lost their safe driver discount, but are unable to procure such insurance through ordinary methods, and such insurers may agree among themselves on the use of reasonable rate modifications for such insurance. Such agreements and rate modifications shall be subject to the approval of the department.

Section 38-77-1360. (A) The department shall, after consultation with the insurers licensed to write automobile liability insurance in this State, adopt a reasonable plan or plans for the equitable apportionment among such insurers of applicants for such insurance who are in good faith entitled to or have lost their safe driver discount, but are unable to, procure such insurance through ordinary methods, and, when such plan has been adopted, all such insurers shall subscribe thereto and shall participate therein. Such plan or plans shall include rules for classification of risks and rates therefor by driver classification and territory. Any insured placed with the plan shall be notified of the fact that insurance coverage is being afforded through the plan and not through the private market, and such notification shall be given in writing within ten days of such placement. To assure that plan rates are made adequate to pay claims and expenses, insurers shall develop a means of obtaining loss and expense experience at least annually, and the plan shall file such experience, when available, with the department in sufficient detail to make a determination of rate adequacy.

(B) The plan of operation shall provide for economic, fair, and nondiscriminatory administration and for the prompt and efficient provision of insurance and may contain other provisions, including, but not limited to, preliminary assessment of all members for initial expenses necessary to commence operations, establishment of necessary facilities, management of the association, assessment of the members to defray losses and expenses, commission arrangements, reasonable and objective underwriting standards, appointment of servicing carriers, and procedures for determining amounts of insurance to be provided by the association.

(C) Trend factors shall not be found to be inappropriate if not in excess of trend factors normally used in the development of residual market rates by the appropriate licensed rating organization. Each application for coverage in the plan shall include, in boldfaced 12-point type immediately preceding the applicant's signature, the following statement:

`THIS INSURANCE IS BEING AFFORDED THROUGH THE SOUTH CAROLINA JOINT UNDERWRITING ASSOCIATION AND NOT THROUGH THE PRIVATE MARKET. PLEASE BE ADVISED THAT COVERAGE WITH A PRIVATE INSURER MAY BE AVAILABLE FROM ANOTHER AGENT AT A LOWER COST. AGENT AND COMPANY LISTINGS ARE AVAILABLE IN THE LOCAL YELLOW PAGES.'

(D) The plan of operation shall provide that any profit achieved by the association must be added to the reserves of the association or returned to the policyholders as a dividend but under no circumstances whatsoever shall any profit be paid over to or received by an insurer either in currency or any other benefit of any kind.

(E) Amendments to the plan of operation may be made by the directors of the association with the approval of the commissioner or must be made at the direction of the commissioner after proper notice and public hearing.

(F) The association may not write private passenger automobile insurance with higher limits of coverage than:

(1) two hundred fifty thousand dollars, for bodily injury liability to one person in one accident,

(2) subject to the limit for one person, five hundred thousand dollars because of bodily injury to two or more persons in one accident,

(3) one hundred thousand dollars because of injury to or destruction of property of others in any one accident,

(4) five hundred thousand dollars, combined single limits for either or both bodily injury and property damage.

(G) If a driver covered by the association has not been able to purchase insurance on the voluntary market after five consecutive years of maintaining a safe driver discount, the driver must be placed by the association with an automobile insurance company doing business in the voluntary market in this State. The company must be chosen based on its percentage of automobile insurance business written in this State on the voluntary market. The company must charge the driver the company's preferred or standard rate according to driver classification and territory. A driver assigned under this provision may not be refused insurance until the driver fails to qualify for the safe driver discount. This provision does not preclude the driver from seeking automobile insurance coverage on the voluntary market at any other time.

Section 38-77-1370. The rates, rating plans, rating rules, rating classifications, territories, and policy forms applicable to insurance written by the association and the statistical and experience data relating thereto are subject to this article and to those provisions of Chapter 73 of Title 38 which are not inconsistent with this article.

Section 38-77-1380. The commissioner shall obtain complete statistical data in respect to automobile insurance losses and reparation costs as well as all other costs or expenses which underlie or are related to automobile insurance. The commissioner shall promulgate any statistical plan he considers necessary for the purpose of gathering data referable to loss and loss adjustment expense experience and other expense experience. When the statistical plan is promulgated, the association shall adopt and use it.

Section 38-77-1390. In structuring rates and determining the profit or loss of the association in respect to such insurance, consideration must be given by the commissioner to all investment income so that investment income is a part of the ratemaking and ratesetting process.

Section 38-77-1395. No later than sixty days after the passage of this act, the board must file with the commissioner rates for private passenger automobile insurance liability coverages, uninsured motorist coverages, and underinsured motorist coverages. All of these rates are subject to surcharges or discounts, if any, applicable under any approved Merit Rating Plan, credit, or discount plan promulgated or approved by the commissioner. The board must file:

(1) a standard rate by driver classification and territory twenty percent less than the substandard rate defined in (2). This rate applies to all private passenger automobile insurance risks which qualify for the safe driver discount and are insured directly by or ceded to the association; and

(2) a `substandard' rate by driver classification and territory which applies to all private passenger automobile insurance risks which do not qualify for the safe driver discount and are insured directly by or ceded to the association.

These two rates must be construed so that when the experience generated by them is combined, the association is able to provide private passenger automobile insurance on a self-supporting basis.

Upon the approval of these rates, they must be utilized for all private passenger automobile insurance risks either ceded to or insured directly by the association. No insurer or group of insurers under the same management may cede more than thirty-five percent of total direct cedeable written premiums on South Carolina automobile insurance as reported in the most recently filed annual statement of the insurer or group. The association must submit policy forms, rating plans, and rating rules applicable to insurance to be written by the association to the commissioner for his approval.

Section 38-77-1400. The premium rate charged for coverage must be at rates established on an actuarially sound basis, including consideration of trends in the frequency and severity of losses and must be calculated to be self-supporting.

Section 38-77-1410. The association may provide a rate increase or assessment subject to the commissioner's approval.

Section 38-77-1420. Any deficit sustained by the association in any year must be recouped, pursuant to the plan of operation and the rating plan then in effect by a rate increase applicable prospectively. The commissioner has the authority to authorize and must approve any recoupment under this section.

Section 38-77-1430. After the initial year of operation, rates, rating plans, and rating rules and any provision for recoupment through policyholder assessment or premium rate increase must be based upon the association's loss and expense experience and investment income, together with any other information based upon this experience and income as the commissioner considers appropriate. The resultant premium rates must be on an actuarially sound basis and must be calculated to be self-supporting.

If sufficient funds are not available for the sound financial operation of the association, pending recoupment as provided in Section 38-77-1420, all members, on a temporary basis, shall contribute to the financial requirements of the association in the manner provided for in Section 38-77-1440. Any such contribution must be reimbursed to the members following recoupment as provided in Section 38-77-1420.

Section 38-77-1440. All insurers which are members of the association shall participate in its writings, expenses, and losses in the proportion that the net direct premiums of each member, excluding that portion of premiums attributable to the operation of the association, written during the preceding calendar year bear to the aggregate net direct premiums written in this State by all members of the association. Each insurer's participation in the association must be determined annually on the basis of the net direct premiums written during the preceding calendar year, as reported in the annual statements and other reports filed by the insurer with the commissioner. The assessment of a member insurer may after hearing be ordered deferred in whole or in part upon application by the insurer if, in the opinion of the commissioner, payment of the assessment would render the insurer insolvent or in danger of insolvency or would otherwise leave the insurer in such condition that further transaction of the insurer's business would be hazardous to its policyholders, creditors, members, subscribers, stockholders, or the public. In the event that payment of an assessment against a member insurer is deferred by order of the commissioner in whole or in part, the amount by which the assessment is deferred must be assessed against other member insurers in the same manner as provided in this section. In its order of deferral, or in such subsequent orders as may be necessary, the commissioner shall prescribe a plan by which the assessment so deferred must be repaid to the association by the impaired insurer with interest at the six-month treasury bill rate adjusted semiannually. Any profits, dividends, or other funds of the association to which the insurer is otherwise entitled may not be distributed to the impaired insurer but must be applied toward repayment of any assessment until the obligation has been satisfied. The association shall distribute the repayments, including any interest thereon, to the other member insurers on the basis at which assessments were made.

Section 38-77-1450. Every member of the association is bound by the approved plan of operation of the association and the rules of the board of directors of the association.

Section 38-77-1460. (A) If the authority of an insurer to transact automobile insurance in this State terminates for any reason, its obligations as a member of the association continue until all its obligations are fulfilled and the commissioner has so found and certified to the board of directors.

(B) If a member insurer merges into or consolidates with another insurer authorized to transact insurance in this State or another insurer authorized to transact insurance in this State has reinsured the insurer's entire automobile insurance business in this State, both the insurer and its successor or assuming reinsurer, as the case may be, are liable for the insurer's obligations to the association.

(C) Any unsatisfied net liability of any insolvent member of the association must be assumed by and apportioned among the remaining members in the same manner in which assessments or gain and loss are apportioned and the association shall acquire and have all rights and remedies allowed by law in behalf of the remaining members against the estate or funds of the insolvent insurer for funds due the association.

Section 38-77-1470. The joint underwriting association is governed by a board of seven directors, one of whom is appointed by the Governor to represent the general public and four of whom are appointed by the Governor and represent automobile insurers who are members of the association. Two directors, appointed by the Governor, are agents authorized to represent automobile insurers licensed to do business in this State.

The approved plan of operation of the association may make provision for combining insurers under common ownership or management into groups for voting, assessment, and all other purposes and may provide that not more than one of the officers or employees of such a group may serve as a director at any one time. The board of directors shall elect a chairman by majority vote and he, or his designee, must preside at all meetings of the board.

Section 38-77-1480. Any applicant for insurance through the association or any insurer adversely affected, or claiming to be adversely affected, by any ruling, action, or decision by or on behalf of the association, may appeal to the commissioner within thirty days after the ruling, action, or decision.

Section 38-77-1490. The association shall file in the office of the commissioner annually by March first a statement containing information with respect to its transactions, condition, operations, and affairs during the preceding year. The statement shall contain information prescribed by the commissioner and must be in the form he directs. The commissioner, at any reasonable time, may require the association to furnish additional information concerning its transactions, condition, or any matter connected therewith considered to be material and of assistance in evaluating the scope, operations, and experience of the association.

Section 38-77-1500. The commissioner shall make an examination into the financial condition and affairs of the association at least annually and shall file a report thereon with the Commission, the Governor, and the General Assembly. The expenses of the examination must be paid by the association."

SECTION 16. Section 38-73-455 of the 1976 Code, as last amended by Act 113 of 1991, is further amended to read:

"Section 38-73-455. (A) An automobile insurer shall offer two four different rates for automobile insurance, a base rate as defined in Section 38-73-457 and an objective standards rate which is twenty-five percent above the base rate. Both All of these rates are subject to all surcharges or discounts, if any, applicable under any approved merit rating plan, credit, or discount plan promulgated or approved by the commissioner.

(B) No later than ninety days after the passage of this act, insurers of automobile insurance must file with the commissioner revised rates for all other private passenger automobile insurance policies written by them. Each insurer must file:

(4) a `substandard' rate by driver classification and territory, which is a rate more than the nonpreferred rate but less than or equal to the substandard rate by driver classification and territory for the South Carolina Joint Underwriting Association, as provided for in Article 13 of Chapter 77 of Title 38, and is applicable to all private passenger automobile risks.

(E) An applicant and all operators of the insured automobile who have qualified for the safe driver discount for the last five years and who reside in the same household, and the automobile or the automobile it replaced has been insured for liability coverage for the past twelve months must be written at the preferred or standard rate and may not be ceded to the Joint Underwriting Association. A driver who is claimed as a dependent for income tax purposes is not required to meet the five year requirement as long as the dependent qualifies for the safe driver discount.

(F) An applicant and all operators of the insured automobile who have qualified for the safe driver discount for the last ten years and who reside in the same household and the automobile or the automobile it replaced has been insured for liability coverage for the past twelve months must be written at the preferred rate and may not be ceded to the Joint Underwriting Association. A driver who is claimed as a dependent for income tax purposes is not required to meet the ten year requirement as long as the dependent qualifies for the safe driver discount.

(G) All policies of automobile insurance issued or renewed with effective dates on or after October 1, 1994, that are written by automobile insurers designated pursuant to Section 38-77-590(A), for risks written by them through producers designated pursuant to that same section, and all policies ceded to the Joint Underwriting Association by automobile insurers must be written at the rates provided for in Section 38-77-1395. However, the Uniform Merit Rating Plan must apply to all such risks.

(H) The Board of Directors of the association must file rates by driver classification and territory for both liability coverages and uninsured motorist coverage.

(1) has obtained a policy of automobile insurance or continuation thereof through material misrepresentation within the preceding thirty-six months; or

(a) The automobile was lawfully parked. An automobile rolling from a parked position is not considered as lawfully parked but is considered as operated by the last operator.

(b) The applicant or other operator or owner was reimbursed by or on behalf of a person responsible for the accident or has a judgment against this person.

(f) Accidents involving damage by contact with animals or fowl.

(g) Accidents involving physical damage, limited to an caused by flying gravel, missiles, or falling objects.

(6) has been convicted or forfeited bail during the thirty-six months immediately preceding the effective date for:

(a) any felony involving the use of a motor vehicle,

(b) criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle,

(c) leaving the scene of an accident without stopping to report,

(d) theft or unlawful taking of a motor vehicle,

(e) operating during a period of revocation or suspension of registration or license,

(f) Knowingly permitting an unlicensed person to drive,

(g) reckless driving,

(h) the making of material false statements in the application for licenses or registration,

(i) impersonating an applicant for license or registration or procuring a license or registration through impersonation, whether for himself or another,

(j) filing of a false or fraudulent claim or knowingly aiding or abetting another in the presentation of such a claim,

(k) failure to stop a motor vehicle when signaled by means or a siren or flashing light by a law enforcement vehicle; or

(8) has used the insured automobile as follows or if the insured automobile is:

(a) used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool must not be considered use of an automobile for hire or compensation,

(b) used in the business of transportation of flammables or explosives,

(c) used in illegal operation, or

(C) (I) Member companies of an affiliated group of automobile insurers may not utilize different filed rates for automobile insurance coverages which they are mandated by law to write. For the purpose of this section, an affiliated group of automobile insurers includes a group of automobile insurers under common ownership, management, or control. Those automobile insurers designated pursuant to Section 38-77-590(a), for automobile insurance risks written by them through producers designated by the Facility governing board pursuant to that section, shall utilize the rates or premium charges by coverage filed and authorized for use by the rating organization licensed by the Commissioner pursuant to Article 11, Chapter 73 of this title, which has the largest number of members or subscribers for automobile insurance rates. However, those automobile insurers designated pursuant to Section 38-77-590(a) are not required to use those same rates or premium charges described in the preceding sentence for risks written by them through their authorized agents not appointed pursuant to Section 38-77-590.

(D) (J) An automobile insurance policy may be endorsed at any time during the policy period to reflect the correct rate or premium applicable by reason of the factors or conditions described in subsection (A) which existed prior to the commencement of the policy period in which the endorsement is made, regardless of whether the factors or conditions were known or disclosed to the insurer at the commencement of the policy period. However, no No policy may be endorsed during a policy period to reflect factors or conditions occurring during that policy period. A policy may be endorsed during a policy period to recognize the addition or deletion of an operator or vehicle.

(E) For purposes of determining the applicable rates to be charged an insured, an automobile insurer shall obtain and review an applicant's motor vehicle record."

SECTION 17. Section 38-73-760 of the 1976 Code, as last amended by Act 148 of 1989, is further amended by adding:

"(g) No surcharge may be assessed for the first conviction of speeding less than twenty miles per hour if the person convicted has maintained the safe driver discount for the previous three years.

(h) No surcharge may be assessed for convictions of the following violations occurring on or after January 1, 1995: failing to dim lights; operating with improper lights; operating with improper brakes; or operating a vehicle in unsafe condition." SECTION 18. Section 56-10-270 of the 1976 Code is amended to read:

"Section 56-10-270. (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 punished as follows:

(1) for a first offense, fined not less than one two hundred dollars nor more than two three hundred dollars or imprisoned for thirty days or may be ordered to perform up to fifty public service hours, or a combination of these, and,

(2) upon conviction of a second offense, be fined two three hundred dollars or imprisoned for thirty days or perform up to one hundred public service hours, or a combination of these, or both, and

(3) for a third and subsequent offenses must be imprisoned for not less than forty-five days nor more than six months and be fined up to four hundred dollars or serve up to two hundred public service hours, or a combination of these. 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.

(b) The department upon receipt of information to the effect that any person has been convicted of violating subsection (a) of this section shall suspend the driving privilege and all license plates and registration certificates issued in the person's name for a period of thirty days for a first offense, for a period of ninety days for a second offense, and for a period of six months for a third and each subsequent offense. and may not reinstate that The person's privileges may not be reinstated until proof of financial responsibility has been filed.

(c) Any person whose license plates and registration certificates which are suspended as provided in this section, which are not suspended for any other reason, may have them immediately restored, if he files proof of financial responsibility with the department."

SECTION 19. The 1976 Code is amended by adding:

"Section 38-77-116. Upon issuance of a new private passenger automobile insurance policy, the insurance company or agent must review with the new applicant a list of driving offenses and the related fine and punishment, as well as the possible increase in the rates, the effect of any surcharges, or the effect of the loss of the safe driver discount. This list must be on a form approved by the Chief Insurance Commissioner and must accompany the policy."

SECTION 20. After September 30, 1994, the governing board of the Joint Underwriting Association, enacted pursuant to Article 13 of Chapter 77 of Title 38 of the 1976 Code as contained in this act, shall contract with one or more insurers or business entities to serve as the designated carrier and shall establish a procedure for the selection of the designated carrier. In developing this procedure, the board must establish criteria which will assure the designated carrier's ability to adequately provide policy-writing and claims service. However, the board may not require that the designated carrier be a licensed insurance company. Designated carrier contracts must be for a period of three years and must be awarded upon the terms and conditions for competitive sealed bidding as provided in Section 11-35-1520 of the 1976 Code.

If the designated carrier fails two claims audits, including a re-audit, within the contract term, the designated carrier is disqualified for renewal of its contract with the Facility upon expiration of its existing contract. Designated carrier contracts awarded pursuant to this section must provide that the failure of two claims audits, including a re-audit, during the contract term constitutes a material breach of the contract. After July 1, 1994, the governing board of the association may not designate any new producers.

Commissions paid to agents for policies ceded to or placed in the Joint Underwriting Association shall be set by the association's board of directors.

SECTION 21. The 1976 Code is amended by adding:

"Section 38-77-175. (A) When the operator or owner of a motor vehicle is issued a traffic ticket for a moving violation by a law enforcement officer, he must be furnished a written request form to complete to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the Department of Highways and Public Transportation.

(B) The completed and verified form must be returned by the operator or owner to the department within fifteen days from the date he receives it. Failure to return the form verified in the proper manner is prima facie evidence that the vehicle was uninsured.

(C) Any fine collected for a violation of Section 56-10-270, relating to driving uninsured, as a result of this section must be deposited in the treasury of the municipality or the county employing the law enforcement officer who issued the original ticket, if such law enforcement officer is a municipal or county employee, or in the general fund of the State, if the law enforcement officer who issued the original ticket is an employee of a state agency or department."

SECTION 22. The 1976 Code is amended by adding:

"Section 56-7-12. (A) When the operator or owner of a motor vehicle is issued a traffic ticket for a moving violation by a law enforcement officer, he must be furnished a written request form to complete to verify liability insurance coverage. The form must be in a manner prescribed by regulation of the Department of Highways and Public Transportation.

SECTION 23. Article 5 of Chapter 77 of Title 38 of the 1976 Code and Sections 38-73-1420, 38-73-1425, 38-77-285, 38-77-920, 38-77-940, 38-77-950, and 38-77-960 are repealed on October 1, 1994.

SECTION 24. Section 38-77-111 of the 1976 Code, as added by Act 148 of 1989, is amended to read:

"Section 38-77-111. An automobile insurer may cede the coverages of an automobile insurance policy that it is mandated to write to the Reinsurance Facility Joint Underwriting Association but it may not cede coverages under a policy that it is not mandated by law to write except for tort liability coverage and uninsured motorist coverage for those risks that do not qualify for the safe driver discount. However, if an insurer cedes a coverage it is mandated to write by law, it shall cede all coverages under that policy that it is mandated to write."

SECTION 25. If any provision of the act or the application thereof to any person or circumstance is held to be unconstitutional or otherwise invalid, the remainder of this act and the application of such provision to other persons or circumstances are not affected thereby, and it is to be conclusively presumed that the legislature would have enacted the remainder of this act without such invalid or unconstitutional provision.

SECTION 26. Except as otherwise specifically provided herein, this act takes effect upon approval by the Governor.

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