Not My Fault, Not My Penalty Act

AN ACT
TO PROTECT MOTORISTS FROM INSURANCE PREMIUM INCREASES, CANCELLATION, OR NONRENEWAL BASED ON MOTOR VEHICLE ACCIDENTS NOT CAUSED BY THE INSURED; TO REQUIRE TRANSPARENCY AND NOTICE OF FAULT DETERMINATIONS; TO PROVIDE A RIGHT TO CONTEST SUCH DETERMINATIONS THROUGH CIVIL ACTION; AND TO PROVIDE AN EFFECTIVE DATE.

SECTION 1. Legislative Findings and Purpose

(A) The General Assembly finds that:

  1. South Carolina motorists who are not at fault in motor vehicle accidents should not be penalized through premium increases, policy cancellations, or nonrenewals based on events beyond their control.
  2. Insurance rates and underwriting decisions should be based on actual risk and fault, not the mere occurrence of an accident.
  3. Transparency and due process in insurance underwriting decisions are essential to maintaining public trust and ensuring fairness.

(B) The purpose of this act is to prohibit adverse insurance actions based on accidents not caused by the insured and to provide a fair and transparent process for contesting fault determinations.

SECTION 2. Prohibition on Adverse Actions for Not-at-Fault Accidents

(A) An insurer may not increase an automobile insurance premium for a named insured as a result of a motor vehicle accident unless the accident was caused, in whole or in part, by the insured or a permissive user of the insured vehicle.

(B) An insurer may not cancel or refuse to renew an automobile insurance policy based on an accident or accident history unless the accident was caused, in whole or in part, by the insured or a permissive user of the insured vehicle.

SECTION 3. Notice of Fault Determination

(A) If an insurer determines that an insured or permissive user was wholly or partially at fault in an accident and relies on that determination to increase a premium, cancel, or refuse renewal, the insurer shall provide written notice to the policyholder within ninety days of the determination.

(B) The notice must:

  1. state the action taken or proposed;
  2. set forth the specific factual basis and evidence relied upon to support the determination of fault; and
  3. inform the insured of the right to contest the determination under this act.

SECTION 4. Right to Contest Fault Determination

(A) A named insured who disputes an insurer’s determination of fault may file a civil action in a court of competent jurisdiction seeking a declaratory judgment that the insured was not wholly or partially at fault.

(B) The action must be filed within one hundred twenty days of receipt of the notice required under Section 3.

(C) The filing of such action shall stay any proposed premium increase, cancellation, or nonrenewal arising from the disputed accident until resolved by final judgment.

(D) In any action under this section, the insurer bears the burden of proving by a preponderance of the evidence that the insured or permissive user was wholly or partially at fault.

(E) If the court finds that the insured was not wholly or partially at fault, the court shall order appropriate relief, including:

  1. rescission of any related premium increase;
  2. reinstatement or renewal of the policy;
  3. refund of excess premiums collected; and
  4. reasonable attorney’s fees and costs to the prevailing insured.

(F) The rights and remedies provided under this section are cumulative of all other remedies available under law.

SECTION 5. Limitations on Use of Accident Reports

An insurer may not rely solely on a law enforcement officer’s determination of contributing factors or fault, or on the existence of an accident report, to assign fault for underwriting or premium-rating purposes.

SECTION 6. Regulatory Authority

The South Carolina Department of Insurance may promulgate regulations necessary to implement and enforce this act.

SECTION 7. Effective Date

This act takes effect upon approval by the Governor and applies to all automobile insurance policies issued or renewed on or after that date.