Bill Would Double S.C. Auto Insurance Minimum

By: Shaun Chornobroff/S.C. Daily Gazette

COLUMBIA — South Carolina drivers who pay as little as possible for their auto insurance would need to double their coverage under legislation passed Thursday by the Senate.

State-required insurance minimums set 18 years ago simply aren’t enough to cover any serious accident — and often, not even a minor one — which shifts costs to the people who aren’t at fault, senators said.

A proposal to double those bare minimums got wrapped into the Senate’s broad bill overhauling the rules on personal injury lawsuits and insurance. The suggestion by Sen. Ronnie Cromer quickly gained bipartisan support, offering a moment of easy consensus as debate on the larger package dragged out over four weeks.

“If somebody were to hit your car and total it, hopefully they would have enough to pay for it,” the Newberry County Republican told senators. But the minimums won’t even cover the car, much less pay the bills “if you had to go to the hospital.”

State law requires drivers to have insurance policies that pay for property damages and injuries in wrecks they cause. Since 2007, drivers have been able to have policies that pay no more than $25,000 for property damage, $25,000 for medical expenses if a single person is hurt, and $50,000 total for injuries no matter how many people are in the vehicles.

“We have long needed to increase it,” said Sen. Margie Bright Matthews, D-Walterboro. (Despite her support of that particular piece, she ultimately voted against the entire bill.)

Unlike many of his colleagues at odds with each other over the bill, Cromer is not a lawyer or an insurer. He’s a pharmacist. But he realized a change was needed, he said, after a driver with minimum coverage rear-ended a friend’s new Corvette, which had less than 8,000 miles on it.

“You’re not going to fix a Corvette rear end for $25,000,” he told the SC Daily Gazette on Thursday.

The bill would double the liability minimums to $50,000 and $100,000, though not immediately. The new minimums would take effect two years after the bill becomes law.

That would “give insurance companies time to prepare,” as well as “allow those who have minimum limits to start getting ready for a much higher limit,” said Sen. Mike Johnson, R-Tega Cay, who was instrumental in the Senate reaching a compromise on the larger bill.

It’s unclear how many drivers in South Carolina have policies that only pay the minimums. The state Department of Insurance doesn’t keep those numbers, a spokesperson said.

What is clear is that “people who insist on just buying the minimum amount” will have to pay more, said Senate Majority Leader Shane Massey, R-Edgefield.

However, he added, “there’s protection for them as well by making this change,” since it means they’re better covered in case someone hits them.

The change would align South Carolina’s minimums with North Carolina, after coverage minimums rise in that state July 1. Georgia’s minimums are the same as South Carolina’s.

Since everything costs more, it’s a “wise” move to reset the baseline, said Sen. Tom Fernandez, R-Summerville.

Chris Oxford, an agent at North Charleston-based Pinckney-Carter Insurance, said he won’t write auto insurance policies at the existing minimums. It’s just his own personal rule, he said, since the payouts likely won’t cover damages, even if the wreck is little more than a fender bender.

“You run into the back of a Tesla or the back of a Mercedes … that’s more than $25,000,” Oxford said.

His insurance plans just happen to start at the proposed new numbers.

While Oxford couldn’t guess what percentage of drivers carry the minimum coverage, whatever the number is, he said, is too much. Television ads enticing people to pay as little as possible are part of the problem, he added.

“You watch TV, and it says, ‘You only pay for what you need,'” he said. However, customers need more coverage than they realize, he said.

‘Underinsured’ drivers

When the driver at fault doesn’t have enough coverage to pay damages, then the other driver’s insurance can pay for repairs if that policy covers for “underinsured motorists.” But filing a claim to be fully recouped will likely lead to a premium hike for the driver who wasn’t to blame.

Raising the minimums could prevent that rate hike for the driver who isn’t at fault, if the policy of the driver who causes an accident can fully cover the costs.

The percentage of claims in South Carolina paid through “underinsured” coverage has risen rapidly in recent years, according to data from the Pennsylvania-based Insurance Research Council.

In 2018, the coverage accounted for 12.8% of all claims for auto wrecks in the Palmetto State. By the end of 2023, it accounted for 21.5%, or 3.5 percentage points above the national rate, according to the council.

“It does cost more to repair cars and people than it did yesterday and the day before,” said Dale Porfilio, president of the nonprofit research group.

But many drivers don’t realize why they need “underinsured” coverage. While state law requires insurers to offer it, drivers aren’t required to buy it.

Massey said the debate could be a public service announcement of sorts.

For anyone paying attention to the Senate livestream, he said, “You should have underinsured motorist coverage.”