McAlister v. State Farm Mut. Auto. Ins. Co., 1465
| Decision Date | 23 January 1990 |
| Docket Number | No. 1465,1465 |
| Court | South Carolina Court of Appeals |
| Parties | William E. McALISTER, Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. . Heard |
William W. Kehl, of Wyche, Burgess, Freeman & Parham, Greenville, for appellant.
Alexander S. Macaulay, of Miley & Macaulay, Walhalla, for respondent.
This is a declaratory judgment action brought to determine an insurance coverage question. The trial court held the Respondent, McAlister, had underinsured motorist coverage of $25,000 under a policy issued by State Farm. State Farm appeals. We affirm.
The facts in this case were stipulated at trial. The at-fault driver 1 struck McAlister's vehicle causing damages for bodily injury to McAlister in excess of $50,000. The at-fault driver had $25,000 in liability insurance coverage which has been paid to McAlister.
At the time of the accident, McAlister had two policies with State Farm. One policy insured his automobile and the other insured his truck. The automobile policy provided underinsurance coverage of $25,000 for each person and $50,000 for each accident. The policy also contained a provision which limited underinsured motorist coverage to $15,000 per person and $30,000 per accident if the insured was driving a vehicle owned by him but not described in the policy declaration at the time of the accident. The truck policy provided no underinsured motorist coverage. McAlister was driving the truck at the time of the accident.
McAlister demanded $25,000 from State Farm from the automobile policy. State Farm declined to pay underinsured motorist coverage in any amount greater than $15,000 relying on the provision in the automobile policy which limited underinsured motorist coverage to $15,000 if the insured was not driving the described vehicle at the time of the accident. The trial judge held this policy provision void as violative of the Financial Responsibility Act.
The following pertinent portion of Section 56-9-831, Code of Laws of South Carolina, 1976, as amended, was in effect at the time of the accident:
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. Coverage on any other vehicles shall not be added to that coverage. Benefits paid pursuant to this section shall be subject to subrogation and assignment. (emphasis added) 2
State Farm argues the emphasized portion of Section 56-9-831 permits insurers to limit underinsured motorist coverage in South Carolina. By its interpretation of 56-9-831, if an insured purchases underinsured motorist coverage in excess of the basic limits of $15,000 per person and $30,000 per accident, the statute requires the insurer to provide coverage "only to the extent of the coverage he has on the vehicle involved in the accident." Read literally, State Farm says the statute permits it to exclude all underinsured motorist coverage when the accident occurs while the insured is driving another vehicle owned by him that has no underinsured motorist coverage. Here, however, the actual policy limitation is not so broad since it purports to restrict coverage only to $15,000. State Farm pointedly argues that if the statute permits a complete exclusion of coverage, it necessarily permits the limitation contained in the policy.
On the other hand, McAlister argues that under the precedent of Gambrell v. Travelers Ins. Cos., 280 S.C. 69, 310 S.E.2d 814 (1983), the only restriction State Farm may include in its policy is that an insured may not have more underinsured motorist coverage than he has liability coverage.
Our Supreme Court in Garris v. Cincinnati Ins. Co., 280 S.C. 149, 153, 311 S.E.2d 723, 726 (1984), held:
Underinsured motorist coverage is controlled by and subject to our underinsured motorist act, and any insurance policy...
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