§ 1.12 Renewals

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 1.12 Renewals

A renewal of insurance policy is considered a new contract under South Carolina law, "unless the policy requires both parties to renew and no terms of the policy (including the premium) are changed from year to year."¹²¹ The South Carolina Supreme Court has explained:

We hold that unless (1) the expiring policy mandates the same terms shall remain in effect and (2) the terms of the policy do not change upon renewal, renewal is a new contract requiring a valid offer of UIM coverage. Absent a mandatory provision in the expiring policy extending its terms, the fact that a renewal continues in effect the same terms as the expiring policy is not dispositive. Conversely, where the terms of the policy are in fact changed upon renewal, the renewal is a new contract irrespective of the provisions in the expiring policy regarding renewal. We hereby overrule the Court of Appeals' recent decision in the contrary in Simpson v. State Farm Mutual Insurance Co., 304 S.C. 137, 403 S.E.2d 167 (Ct. App. 1991).¹²²

"Where renewal specifically contemplates a new premium, the South Carolina Supreme Court holds that renewal of an insurance policy constitutes a new contract."¹²³

The United States Bankruptcy Court for the District of South Carolina addressed this issue in Georgetown Steel Co., LLC v. Capital City Ins. Co. (In re Georgetown Steel Co., LLC).¹²⁴The court considered the language of the policies and reasoned that they "specifically contemplate negotiation of new terms, including a new premium amount every year" and that it was undisputed that the prior policy and current policy had different premium amounts and policy numbers. The policy also provided:

Renewal and Nonrenewal
If the carrier is willing to renew the employer, a renewal notice shall be sent that meets the requirements of the appropriate South Carolina state law . . . .
If a contract carrier is unwilling to renew a policy, a nonrenewal notice must be sent that meets the most restrictive requirements of the appropriate state law and/or the provision of the SCWCARP.¹²⁵

The court explained "[t]his language indicates that an insurer may elect whether or not to offer coverage when an existing assigned risk policy is about to expire."¹²⁶ Therefore, the court determined that per the language of the policy, which was drafted to comply with South Carolina law, the two policies were considered separate policies.

"According to the Insurance Code, section 38-75-740 'applies to all property insurance and casualty insurance, . . . except for . . . any other type of property or casualty insurance as to which there are specific statutory provisions of law governing cancellation, nonrenewal, or renewal of policies.'"¹²⁷ "[I]n the absence of a more specific provision, section 38-75-740 generally governs the manner in which an insurer must nonrenew a policy for property or casualty insurance."¹²⁸ Section 38-75-740 of the South Carolina Code of Laws, entitled "Restrictions on nonrenewal of policies," provides:

(a) No insurance policy may

...