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SOUTH CAROLINA TO RAISE MINIMUM AUTO INSURANCE LIABILITY LIMITS
December 12, 2006
FOR IMMEDIATE RELEASE
Russ Dubisky, Executive Director
803-252-3455 or cell phone 803-708-5271
russd@scinsnews.com
Columbia, S.C. - Nearly 1.5 million motorists may soon see an increase in their auto insurance premiums due to a new law passed by the South Carolina General Assembly. Based on a survey by the South Carolina Insurance News Service, approximately 30 to 35% of drivers in South Carolina currently have the minimum auto insurance limits.
The new law, which takes effect January 1, 2007, was passed earlier this year by the South Carolina General Assembly. Act 395 will raise the minimum amounts of liability insurance coverage. The previous limits were $15,000 of bodily injury coverage per person, $30,000 of bodily injury per accident and $10,000 of property damage coverage (usually written as 15/30/10). The new law requires drivers to carry liability coverage in amounts of no less than $25,000 of bodily injury per person, $50,000 of bodily injury per accident and $25,000 of property damage coverage (usually written as 25/50/25).
The South Carolina Insurance News Service wants to help drivers better understand what this change means to them.
What is the South Carolina law? The current South Carolina law requires motorists to have proof of financial responsibility. Most drivers do that through the purchase of automobile insurance. You can pay a $550 fee to the SC Department of Motor Vehicles to legally drive uninsured (if you qualify) but paying that fee does not provide any insurance coverage.
Bodily Injury and Property Damage liability (BI/PD) covers your legal liability, up to the dollar limits you select when you buy a policy, for an accident in which there is damage or injury to someone else. Claims paid out under this coverage can include the other person’s medical bills as well as repairs to the other person’s property, such as their vehicle or a fence.
BI/PD limits generally appear on a policy as three numbers in a row. In South Carolina today, the minimum limits are 15/30/10. If you’ve chosen these limits, your insurance company will pay up to $15,000 for bodily injury per person involved in a claim, up to $30,000 for bodily injury per accident (the maximum that would be paid out under this coverage on a claim) and up to $10,000 for property damage liability.
What other changes will we see? This increase in the limits will result in other required policy changes. Changes will be made on your policy renewal date. These changes will increase your premium if you currently carry the minimum limits. The increase will range from 7% to 20% or $32 per year up to $118 per year based on a survey of automobile insurance companies doing business in South Carolina by the South Carolina Insurance News Service. Check with your insurance provider for specific questions regarding your premium.
Are you affected by the new law? You are affected by this change in minimum limits if your current vehicle insurance policy has BI/PD or Uninsured and Underinsured Motorists (UM/UIM) limits of anything less than 25/50/25.
In South Carolina, state law also requires that your policy include UM, which protects you if you get into an accident with a driver who does not have any insurance. If your UM limits are currently below the new minimum limits, they will be increased at your next renewal.
Also, state law requires that insurance companies must also offer you the option of purchasing UIM up to your limits of liability. UIM pays for injuries or property damage caused by a vehicle with liability limits less than the damages caused.
What happens now? The law goes into effect January 1, 2007; however insurance companies have recently started sending out their renewal notices and will continue sending those renewal notices out to customers over the next several months. Customers need to pay close attention to any letters and other materials they receive from their insurance company.
Your policy limits will automatically be changed by your insurer as required by the new state law. Also, if you buy a new policy after January 1, you will automatically be offered the new limits.
What should you do? The South Carolina Insurance News Service recommends you take the following steps to prepare for the new law:
Look at your current insurance policy to determine if you are affected by the change. You will be affected if your current BI/PD liability limits are anything less than 25/50/25. You will also be affected if your UM and/or UIM limits are below the current limits. Insurance companies must increase your liability limits to comply with the new state law.
Prior to your policy renewal date, you will receive a UIM offer form. You may select UIM coverage up to your limits of liability or you may reject UIM coverage. If you fail to complete and return the UIM offer form, then state law requires that insurance companies must add UIM coverage to your policy at your liability limits.
If you are affected by the new law, understand when your policy renews so you can plan for a potential increase in premium. Your should receive your renewal bill, along with a letter alerting you to the change in limits, at least 30 days in advance of your next renewal. When you receive your bill, look to see how much it has increased.
Consider buying optional Underinsured Motorists coverage. Increases in liability, UM and UIM coverage will require additional premiums over your current premium. Your premium will be due at renewal. Failure to pay the premium will result in a lapse of your policy for nonpayment of premium.
Take some time to shop around – insurance rates vary widely from company to company.
For more information on auto insurance or to schedule an interview, call the South Carolina Insurance News Service at 803-252-3455 or e-mail alove@scinsnews.com
For 30 years, the South Carolina Insurance News Service, a nonprofit organization, has been providing free insurance information to consumers and the media about property and casualty insurance issues. The News Service is funded by insurance companies doing business in South Carolina.
Facts on New Minimum Auto Insurance Limits (Effective 1/1/07)
When were the auto insurance limits last increased by the South Carolina General Assembly?
In the passage of the auto reform bill in 1997, which went into effect March 1, 1999, the limits were raised from 15/30/5 to 15/30/10. The new limits will now be 25/50/25. (See news release “South Carolina to Raise Minimum Auto Insurance Liability Limits” dated 10/30/06 for more detailed information).
How much will it cost someone with limits of 15/30/10 to go to 25/50/25?
Based on a survey of the major auto insurance companies in South Carolina, the costs would vary greatly from company to company. Based on the companies surveyed, the increases would range from 7% to 20%. In terms of dollar amounts, the increases would range from $32 to $118 per year.
What are the limits in other states? Where will SC rank in the United States for the limits of 25/50/25? How many other states have the same or lower limits than South Carolina?
Nine states will have the same limits as South Carolina: AR, GA, MS, NE, NH, ND, OK, RI, SD
Four states will have some form of higher limits than South Carolina: Alaska (50/100/25), Maine (50/100/25), Minnesota (30/60/10) and North Carolina (30/60/25).
38 states (including the District of Columbia) will have some form of lower limits than South Carolina. For example, 25/50/15, 20/40/10, etc. (as of 1/1/07) (Source: Insurance Information Institute)
How many uninsured motorists are there in South Carolina?
Based on data from the SC Department of Motor Vehicles from February 2006, there were 24% uninsured (based on newly registered vehicles). Based on data from 2003, there were as many as 43% uninsured at the time of an accident. In 2005, there were 27-31% uninsured at the time of an accident. There are currently no comparable figures for 2006 on vehicles uninsured at the time of an accident.
What is the average cost of auto insurance in South Carolina?
Based on the latest data available from the NAIC, the average person in South Carolina spends $763.35/year on auto insurance and the national average is $837.86. (Source: National Association of Insurance Commissioners - Average Auto Insurance Premium Report 2004)
South Carolina Historical Data on Average Auto Insurance Expenditure and Rank in US:
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| 2004 | $763.35 | n/a | | 2003 | $744.79 | 26 | | 2002 | $702.44 | 26 | | 2001 | $636.26 | 34 | | 2000 | $619.57 | 31 | | 1999 | $593.32 | 34 | | 1998 | $655.33 | 26 | | 1997 | $629.06 | 27 | | 1996 | $601.97 | 28 | | 1995 | $582.26 | 27 |
Where do our neighboring states rank in the cost of auto insurance?
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| Georgia | $778.63 | | Florida | $1,062.31 | | North Carolina | $597.02 | | Virginia | $702.23 |
What is the average income in South Carolina?
South Carolina ranked 43rd in the nation in 2005 (according to the Moore School of Business at the University of South Carolina)
For 30 years, the South Carolina Insurance News Service, a nonprofit organization, has been providing free insurance information to consumers and the media about property and casualty insurance issues. The News Service is funded by insurance companies doing business in South Carolina.
For more information, contact the South Carolina Insurance News Service at 803-252-3455 or use our contact form.
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