The South Carolina appellate courts recently addressed the limits of when a person may recover underinsured motorist coverage benefits even though no coverage existed on the date of accident. Under South Carolina law, a car insurance company is required to make a "meaningful offer" to sell a new policyholder underinsured motorist coverage.
Unlike liability coverage and uninsured motorist coverage, which you are required by law to buy, underinsured motorist coverage is completely optional in South Carolina. However, if an insurance company fails to make "meaningful offer" of underinsured motorist coverage to a new customer, the person who needs that coverage may later be able to get a court to effectively re-write the policy to include that coverage.
In Grinnell Corp. v. Wood, the Supreme Court held that in a situation where a corporation sent an employee well-trained in insurance and risk management to buy insurance coverage, and that person admits to knowingly declining optional underinsured and uninsured motorist coverage, a "meaningful offer" was made. Thus, the insurance contract could not be reformed after the accident to provide for additional coverage benefits.
In Ray v. Austin, the Supreme Court held that in a similar situation where a corporation sent an agent to buy insurance coverage, and that agent declined optional underinsured and uninsured motorist coverage in keeping with the corporation's stated risk management strategy, and incorporated that strategy into the policy, a "meaningful offer" was made.Thus, the insurance contract could not be reformed after the accident to provide for additional coverage benefits.
In GEICO v. Draine, the Court of Appeals held that in a situation where the insurance company properly offered optional underinsured motorist coverage and the insured properly rejected it when he first bought the policy, the insurance company did not have to make another "meaningful offer" when it offered him another chance to buy the coverage when it sent materials to renew his existing policy.
This "meaningful offer" rule was created to encourage insurance companies to offer these coverages to their customers.
If the insurance company does not offer the coverage, and the customer later is involved in a car accident and needs the coverage, the customer can get a court to say that the insurance must provide benefits as if the customer had bought and paid for the coverage.
As a South Carolina personal injury lawyer I feel this can be a great help to injured motorists when they need it. However, when the person who purchased the coverage clearly knew that they were declining not to purchase this optional coverage, South Carolina courts will probably not allow them to take advantage of this convoluted "meaningful offer" rule.