No Punishment for Protection Act

AN ACT
TO PROTECT INSURED MOTORISTS FROM RETALIATION FOR FILING OR RECEIVING PAYMENT UNDER UNINSURED OR UNDERINSURED MOTORIST COVERAGE; TO PROHIBIT PREMIUM INCREASES, CANCELLATION, OR NONRENEWAL BASED ON SUCH CLAIMS; TO REQUIRE WRITTEN NOTICE AND TRANSPARENCY; TO PROVIDE A RIGHT TO CONTEST ADVERSE ACTIONS; AND TO PROVIDE AN EFFECTIVE DATE.

SECTION 1. Legislative Findings and Purpose

(A) The General Assembly finds that:

  1. Uninsured and underinsured motorist coverage is intended to protect South Carolina drivers injured by motorists who lack sufficient insurance.
  2. Penalizing an insured for filing or receiving payment on a UM or UIM claim is contrary to public policy and undermines the purpose of such coverage.
  3. Retaliatory underwriting or rating actions discourage consumers from exercising rights they have purchased and weaken confidence in the insurance system.

(B) The purpose of this act is to prohibit adverse insurance actions related to UM and UIM claims and to ensure fairness, transparency, and meaningful remedies for South Carolina policyholders.

SECTION 2. Prohibition on Retaliation for UM and UIM Claims

(A) An automobile insurer may not increase a premium, cancel, refuse to renew, reclassify, or otherwise adversely underwrite or rate an automobile insurance policy if the action is, in any measure, related to or influenced by the insured’s filing or receipt of payment under uninsured motorist or underinsured motorist coverage.

(B) Any premium increase, cancellation, or nonrenewal occurring within twelve months after an insured files or receives payment on a UM or UIM claim is presumed to be related to that claim. The insurer bears the burden of rebutting this presumption.

SECTION 3. Notice Requirements

(A) If an insurer takes an action described in Section 2, the insurer shall provide written notice to the named insured within ninety days of the determination.

(B) The notice must:

  1. specify the action taken;
  2. set forth the specific factual basis and evidence relied upon by the insurer; and
  3. inform the insured of the right to contest the action under this act.

SECTION 4. Right to Contest Adverse Action

(A) A named insured who disputes an insurer’s action under this act may file a civil action in a court of competent jurisdiction seeking declaratory and equitable relief.

(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 an action shall stay any proposed premium increase, cancellation, or nonrenewal until the matter is resolved by final judgment.

(D) In any proceeding under this section, the insurer bears the burden of proving by clear and convincing evidence that its action was not related to or influenced by the filing or payment of a UM or UIM claim.

(E) If the court finds that the insurer violated this act, the court shall order appropriate relief, including:

  1. rescission of any 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 act are cumulative of all other remedies available under law.

SECTION 5. Limitations on Fault and Risk Assessment

An insurer may not rely solely on a law enforcement determination of fault or the mere existence of a UM or UIM claim to assign fault or assess risk 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.