II. Persons Defined as Insureds

• Library: The Law of Automobile Insurance in SC (SCBar) (2015 Ed.)

II. Persons Defined as Insureds

A. General

The liability policy is required to provide coverage to "the persons defined as insured."⁷⁵ "Insured" is statutorily defined to mean:

[t]he named insured and, while resident of the same household, the spouse of any named insured and relatives of either, while in a motor vehicle or otherwise, and any person who uses with the consent, expressed or implied, of the named insured the motor vehicle to which the policy applies and a guest in the motor vehicle to which the Policy applies or the personal representative of any of the above.⁷⁶

The liability policy need not cover any liability to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or while engaged in the operation, maintenance, or repair of the motor vehicle.⁷⁷

In Burgess v. Nationwide Mutual Insurance Company,⁷⁸ an underinsured coverage case, the Supreme Court distinguished UIM coverage from UM coverage and basic liability coverage. With UIM, unlike UM and basic liability, insurance companies may contractually limit who can qualify as an "insured" because UIM coverage is voluntary and not mandated in all insurance contracts. Both basic liability and UM coverage are mandated in all insurance contracts according to § 38-77-140 and § 38-77-150 respectively.

B. The Named Insured, Resident Spouse and Relatives

The "named insured" refers to the person named in the policy declarations.⁷⁹ Spouses and relatives are covered only when they reside in the named insured's household.⁸⁰ "Resident" has been defined as:

'One who resides in a place' or 'one who dwells in a place for a period of more or less duration.' 'Resident usually implies more or less permanence of abode, but is often distinguished from inhabitant as not implying great fixity or permanence of abode.'...Residency also implies 'dwelling, or having an abode, for a continued length of time.'⁸¹

"Household" has been defined as "those who dwell under the same roof and compose a family."⁸² The Supreme Court has also stated that the "phrase 'resident of the same household' has no absolute or precise meaning, and, if doubt exists as to the extent or fact of coverage, the language used in most policies will be understood in its most inclusive sense."⁸³ Physical presence is not necessarily required, as for example, a student away at college.

In Inman v. South Carolina Insurance Co.,⁸⁴ the Court of Appeals defined the term "relative" as 'a person connected by blood or marriage.' A "relative" may also include "one who is adopted."⁸⁵ However, foster children can be excluded.⁸⁶ The Act only includes relatives, not family members.⁸⁷

In Coakley v. Horace Mann Ins. Co.,⁸⁸ the policy defined relative to include dependent children away at college. The Court of Appeals found a child to not be dependent on his mother since he was away at college and the father provided the majority of the financial support. The Supreme Court, however, disagreed and found the child to be dependent because who provided the majority financial support was not determinative. Rather, since the mother provided occasional financial support, paid the child's auto insurance, claimed the child as a dependent on her tax returns, and the child maintained a room in her home, the child was deemed a dependent for the purposes of his mother's policy.

The ISO Endorsement⁸⁹ covers the named insured, resident spouses and "family members." A "family member" is defined as "a person related to you by blood, marriage or adoption who is a resident of your [the named insured's] household. This [definition] includes a ward or foster child." The South Carolina Supreme Court has defined "family" as:

[i]n its ordinary and primary sense the term signifies the collective body of persons living in one house, or under one head or manager, or one domestic government; the relations between such persons necessarily being of a permanent or domestic character, not that of persons abiding temporarily together as strangers; a household; those who live under the same roof with the pater-familias, who forms his fireside.⁹⁰

This class of insureds is covered whether or not the named insured gave his permission to use the covered vehicle.⁹¹ Dealing primarily with the issue of whether the named insured could be an excluded driver by endorsement, the court, in Lovette v. United States Fidelity & Guaranty,⁹² said:

In our view, Section 56-11-250 was intended to allow a named insured (Owner) to obtain a lower premium rate if a member of his household has a bad driving record. Under Section 56-11-810(2), a relative who lives in the same household would automatically be covered whether the named insured gave his permission or not. This is the provision the General Assembly apparently wishes to alter by allowing an exclusion.⁹³

Note, however, that "the terms of the statute are conjunctive: a member of the named insured's household must also be a spouse or a relative to constitute a defined insured."⁹⁴

In Baridey v. International Mutual Insurance Co.,⁹⁵ the Supreme Court rejected the argument that the Motor Vehicle Financial Responsibility Act required a brother, living separate and apart from the insured with a family of his own and no ties of dependency, to be considered a member of the insured's immediate family within the terms of a liability policy.

In Buddin v. Nationwide Mutual Insurance Co.,⁹⁶ the court considered whether a nephew was a relative "resident of the same household" as his uncle and thus entitled to liability coverage. The court held that the only reasonable inference to be drawn from the testimony was that the nephew was a resident relative. The court held that neither (1) the payment of rent or board; (2) the absence of control by the uncle over his nephew; nor (3) the fact that there was a lack of permanent living arrangement was determinative of the issue as to whether one was a resident of the household of another. The court also held that "a resident of the same household is one, other than a temporary or transient visitor, who lives together with others of the same house for a period of some duration, although he may not intend to remain there permanently."⁹⁷

In Inman v. South Carolina Insurance Co.,⁹⁸ the Court of Appeals held that a 28-year-old adult who "had for some time been a member of the household" of the insured's son-in-law, but who was not connected by blood, marriage, or adoption, was not a relative within the meaning of the Act.

C. Permissive Users

1. General

Section 38-77-30(7) requires liability coverage to be extended not only to the named insured when he operates the insured vehicle but also to "any person who uses with the consent, expressed or implied, of the named insured the motor vehicle to which the policy applies and a guest in the motor vehicle.or the personal representative of any of the above."⁹⁹

The permission which puts the omnibus or extended coverage clause of the policy of insurance into operation may be either express or implied, but whether the permission be expressly or impliedly conferred, it must originate in the language or the conduct of the named insured or someone having authority to bind him in that respect.¹⁰⁰

"It is the person using the vehicle, and claiming omnibus coverage, who must have the consent of the named insured. Consent must run to the 'person who uses,' as well as to the use he makes."¹⁰¹ The consent must originate, not from the owner of the vehicle involved in the collision, but rather from the named insured.¹⁰²

Furthermore, the burden of proving coverage under the omnibus clause is upon the person seeking coverage.¹⁰³ He has the burden of showing that permission actually existed under the facts and circumstances of the case for his operation of the insured vehicle at the time of the accident, and not just when the motor vehicle was obtained.¹⁰⁴

[O]ne who relies upon this [omnibus] clause of an automobile insurance policy has the burden of establishing that the particular use to which the vehicle was being put at the time of injury was with the permission of the named insured, express or implied.¹⁰⁵

If evidence, though circumstantial, is adequate in scope, credibility and significance, reasonably to establish the presence of these necessary elements, as against denials or explanations by or in behalf of the owner of the car, the requirements are satisfied.¹⁰⁶

The mere fact that one is a "permissive user" of a vehicle within the meaning of an omnibus clause does not create a cause of action against the user, independent of any other relationship between the parties.¹⁰⁷

2. Implied Permission

Section 38-77-30(6) provides that the mandatory liability coverage is extended to those using the 'insured vehicle with implied, as well as expressed, permission.' "Implied authority or permission by the named insured, if established, is as effective to extend the coverage of the omnibus clause as that which is formally conferred."¹⁰⁸ Permission may be implied from the facts and circumstances of the particular situation.¹⁰⁹ It may be established from direct evidence, all pertinent circumstances and proper inferences to be drawn therefrom.¹¹⁰ Implied, like express, consent must originate in the language or in the conduct of the named insured or in someone having authority to bind him in that respect.¹¹¹

Implied consent, rests upon proof of circumstances from which an inference of actual permission or consent reasonably arises. The implication is one of fact based upon circumstantial evidence. Implied consent involves an inference arising from a course of conduct or relationship between the parties, in which there is mutual acquiescence or lack of objection under circumstances signifying assent.¹¹²

In Holloman v. McAllister,¹¹³ the court held that there was implied permission where the owner had actual knowledge of the driver's intent to use the vehicle but took no steps to prevent the driver from doing so.

In South...