Prevent the Patriot Penalty Act

AN ACT
TO PROHIBIT AUTOMOBILE INSURERS FROM USING A LAPSE IN COVERAGE CAUSED BY MILITARY DEPLOYMENT AS A RATING FACTOR OR UNDERWRITING CRITERION; TO REQUIRE ACCEPTANCE OF REASONABLE DOCUMENTATION; TO PROVIDE DEFINITIONS AND ENFORCEMENT AUTHORITY; AND TO PROVIDE AN EFFECTIVE DATE.

SECTION 1. Short Title

This act may be cited as the “Prevent the Patriot Penalty Act.”

SECTION 2. Legislative Findings and Purpose

(A) The General Assembly finds that:

  1. Members of the Armed Forces of the United States, including National Guard and Reserve components, may experience unavoidable lapses in automobile insurance coverage due to military deployment.
  2. Penalizing service members or their families for coverage lapses caused by deployment is unfair and contrary to public policy.
  3. South Carolina has a strong interest in protecting military families from discriminatory or punitive insurance practices related to military service.

(B) The purpose of this act is to ensure that deployment-related lapses in automobile insurance coverage are not used to disadvantage insureds in underwriting or premium rating decisions.

SECTION 3. Definitions

As used in this act:

  1. “Automobile insurance policy” means a policy providing coverage for bodily injury, death, or property damage arising from the ownership, maintenance, or use of a motor vehicle required to be registered or principally garaged in this State.
  2. “Deployment” means the assignment of a member of the Armed Forces of the United States, including National Guard or Reserve components, outside the continental United States for military service, and does not include a permanent change of station within the United States.
  3. “Insured” means a named insured, additional insured, or eligible applicant for an automobile insurance policy.
  4. “Lapse” means a break in automobile insurance coverage between the termination of a prior policy and the effective date of a new policy.
  5. “Spouse” means the legally recognized spouse of an insured who accompanies the insured during a qualifying deployment.

SECTION 4. Prohibition on Use of Deployment-Related Lapses

(A) An insurer may not treat a lapse in automobile insurance coverage as a negative rating factor or adverse underwriting consideration if the lapse occurred during, or within forty-eight hours before or after, the insured’s deployment.

(B) The protections in subsection (A) apply equally to a spouse who accompanied the insured during the deployment.

(C) An insurer may request documentation verifying deployment status but may require only reasonable documentation, including:

  1. deployment orders;
  2. a letter from the insured’s commanding officer; or
  3. other official military documentation showing the dates of deployment.

(D) Nothing in this act prohibits an insurer from applying lawful rating or underwriting factors unrelated to a deployment-related lapse in coverage.

SECTION 5. Applicability

This act applies to:

  1. the issuance of a new automobile insurance policy;
  2. the renewal of an existing automobile insurance policy following a deployment-related lapse; and
  3. any underwriting or rating determination occurring on or after the effective date of this act.

SECTION 6. Enforcement

An insurer that violates this act is subject to administrative penalties, corrective action, and enforcement measures as authorized by law and imposed by the South Carolina Department of Insurance.

SECTION 7. Effective Date

This act takes effect on January 1st following approval by the Governor and applies to all automobile insurance policies issued, delivered, or renewed on or after that date.