2.2 South Carolina Motor Vehicle Insurance Laws

Motor vehicle insurance in South Carolina is governed by comprehensive statutes designed to ensure financial responsibility on public roadways and protect motorists from uncompensated injuries caused by uninsured or underinsured drivers. Adjusters handling personal auto or commercial motor vehicle claims in South Carolina must master these statutory requirements.

South Carolina Motor Vehicle Financial Responsibility Act (Title 56, Chapter 9)

South Carolina enforces a compulsory auto liability insurance system. The Motor Vehicle Financial Responsibility Act is codified at Title 56, Chapter 9 of the South Carolina Code of Laws, while compulsory-insurance enforcement and the uninsured-vehicle fee are found in Chapter 10 (Motor Vehicle Registration and Financial Security). Every owner of a motor vehicle required to be registered in South Carolina must maintain continuous financial responsibility, with minimum liability limits set in the insurance code at § 38-77-140.

Compulsory Minimum Liability Limits (25/50/25)

South Carolina requires split-limit liability coverage meeting or exceeding statutory minimums:

• $25,000 Bodily Injury (BI) per person for injury or death in any one accident.
• $50,000 Bodily Injury (BI) per accident total for injury or death of two or more persons in any one accident.
• $25,000 Property Damage (PD) per accident for damage to property of others.

Alternatively, insurers may issue a Combined Single Limit (CSL) policy with a minimum limit of $75,000 per accident covering both bodily injury and property damage claims.

Uninsured Motor Vehicle Fee Alternative

South Carolina allows vehicle owners to drive uninsured legally only if they pay an annual $550 Uninsured Motor Vehicle Fee to the South Carolina Department of Motor Vehicles (SCDMV). Crucial Exam Point: Payment of this $550 fee does NOT provide insurance coverage. It merely permits registration of the vehicle; the uninsured driver remains personally liable for all damages caused in an accident.

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Mandatory Uninsured Motorist (UM) Coverage Provisions

Unlike many states where Uninsured Motorist (UM) coverage can be rejected by the insured, UM coverage is MANDATORY in South Carolina (S.C. Code § 38-77-140 & § 38-77-150).

Statutory UM Requirements

• Every auto liability policy issued in South Carolina must include UM coverage equal to the statutory minimum liability limits (25/50/25).
• UM coverage protects the insured, resident relatives, and occupants of the insured vehicle if injured by an uninsured driver or an unknown hit-and-run driver.
• Property Damage Deductible: Statutory UM property damage (UMPD) is subject to a mandatory $200 deductible per accident.

Hit-and-Run & Phantom Vehicle Evidentiary Rules

To prevent fraudulent claims for single-vehicle accidents blamed on non-existent "phantom" drivers, S.C. Code § 38-77-170 sets strict evidentiary requirements for hit-and-run UM claims:

1. Law Enforcement Notice: The accident must be reported to a law enforcement officer within 24 hours or as soon as practicable.
2. Physical Contact or Witness Corroboration:
   • If there was physical contact between the unknown vehicle and the insured's vehicle, the physical contact satisfies the statutory evidentiary threshold.
   • If there was NO physical contact (phantom vehicle scenario), the insured must present a signed affidavit from a disinterested eyewitness (not an owner or occupant of the insured vehicle) corroborating the facts of the accident.

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Underinsured Motorist (UIM) Coverage & Meaningful Offer Doctrine

Underinsured Motorist (UIM) coverage protects insureds when an at-fault driver carries liability insurance, but the liability limits are insufficient to compensate for total bodily injury damages.

Statutory "Meaningful Offer" Mandate (S.C. Code § 38-77-160)

Under South Carolina law, insurers are not required to include UIM coverage automatically, but they MUST make a meaningful offer of UIM coverage up to the limits of the insured's liability coverage.

• SCDOI Form 3006: The offer must be executed on a form approved by the South Carolina Department of Insurance (SCDOI Form 3006). The form must clearly explain UIM coverage, list coverage options and exact premiums, and provide spaces for written selection or rejection.
• Judicial Policy Reformation: If an insurer fails to make a statutorily compliant "meaningful offer," South Carolina courts will reform the policy to read in UIM coverage up to the insured's liability limits as a matter of law, without requiring additional premium from the insured.

Stacking Principles in South Carolina

South Carolina allows stacking (combining policy limits across multiple vehicles) of UM and UIM coverages under specific statutory guidelines. Named insureds and resident family members can stack UM/UIM coverages for other vehicles owned by them, up to the limits of coverage carried on the vehicle involved in the accident.

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Statutory Cancellation and Nonrenewal Notice Timelines

To safeguard consumers against abrupt loss of mandatory coverage, South Carolina enforces strict written notice timelines under S.C. Code § 38-77-120.

Mid-Term Cancellation (Nonpayment of Premium) ──► 10 Days' Advance Written Notice
Mid-Term Cancellation (Other Statutory Grounds) ─► 30 Days' Advance Written Notice
Policy Nonrenewal at Expiration ─────────────────► 60 Days' Advance Written Notice

Notice Requirements Breakdown

• Nonpayment of Premium: The insurer must provide at least 10 days' advance written notice of cancellation to the named insured.
• Other Statutory Cancellation Grounds: During the policy term (e.g., driver's license suspension/revocation of a named insured, material misrepresentation), the insurer must provide at least 30 days' advance written notice.
• Policy Nonrenewal: If the insurer chooses not to renew an auto policy at its expiration date, it must provide at least 60 days' advance written notice prior to the expiration date, specifying the precise reason for nonrenewal.
• SCDMV Electronic Notification: Whenever auto liability coverage is canceled or nonrenewed, the insurer must notify the SCDMV electronically within statutory reporting windows to enforce financial responsibility compliance.