In State Farm v. Windham, decided August 19, 2020, the SC Court of Appeals found that a driver is entitled to stack underinsured motorist (UIM) policies, including a spouse’s UIM policies, when the driver is in an automobile accident driving a rental car. 

Following the accident, Windham discovered that the at-fault driver’s insurance policy was not enough to cover her damages and sought to recover from her (and her husband’s) UIM policies. 

Their insurance company, State Farm (like a good neighbor, State Farm is… wait, hold on), refused to pay her claim and asked the Court for a “declaratory judgment” that they were not obligated to pay… 

Although the lower court agreed with the insurance company, the SC Court of Appeals held that you can stack insurance policies in SC, even if you are driving a rental car and even if the policies belong to your spouse. 

So, what happens when the other driver’s insurance policy doesn’t cover your damages? Will your own insurance policies pay? When can you “stack” insurance policies in SC?

What Happens When the At-Fault Driver’s Insurance Policy is Not Enough?

You may think that if you are in an accident and it is someone else’s fault, they are required to pay all damages that you suffered because of their negligence. 

And you are right – except, what if they can’t pay? 

You could get a judgment against the other driver for the full amount of damages, but, in most cases, that is useless – you can’t pay your medical bills with an uncollectable judgment. 

If the other driver’s insurance policy limits are not enough to cover your damages, and if the other driver does not have assets that you can take, you may be able to collect from other responsible parties, other insurance policies, or even from your own insurance policies if you purchased underinsured motorist (UIM) coverage. 

Uninsured and Underinsured Policies

Every SC driver is required to purchase auto insurance with the minimum policy limits as well as uninsured motorist (UM) coverage (which covers damage caused by a hit and run or in situations where the other driver has no insurance). 

SC drivers are not required to purchase underinsured motorist (UIM) coverage, but it is a good idea. 

UIM coverage kicks in when the at-fault driver’s insurance is not enough to cover your damages – then, your own insurance policy pays the difference up to the policy limits that you purchased. 

But, what if your UIM coverage is not enough to cover your damages? Can you “stack” multiple UIM policies to increase the total amount that you are able to recover from your insurance company? 

When Can You Stack Insurance Policies in SC? 

“Stacking” of multiple insurance policies is permitted in SC in most cases, although it may be limited by SC law:

“Generally, stacking of additional coverage for which the insured has contracted is permitted unless limited by statute or a valid policy provision.” Ruppe v. Auto-Owners Ins. Co., 329 S.C. 402, 404, 496 S.E.2d 631, 631-32 (1998). “Construing specific statutory language, we have held an insured is entitled to stack [UIM] . . . coverage in an amount no greater than the amount of coverage on the vehicle involved in the accident. To this extent, stacking cannot be contractually prohibited.”

What Does Stacking Mean? 

Stacking means that you can recover damages from more than one insurance policy when necessary to cover your full damages – one at a time, “in succession:” 

“Stacking refers to an insured’s recovery of damages under more than one insurance policy in succession until all of his damages are satisfied or until the total limits of all policies have been exhausted.” State Farm Mut. Auto. Ins. Co. v. Moorer, 330 S.C. 46, 60, 496 S.E.2d 875, 883 (Ct. App. 1998).

Who is Allowed to Stack Insurance Policies in SC? 

A Class I insured is allowed to stack policies, but a Class II insured is not. 

A Class I insured includes “the named insured, his spouse[,] and relatives residing in his household” “who has a vehicle involved in the accident.” 

A Class II insured is “any person using, with the consent of the named insured, the motor vehicle to which the policy applies and a guest in the motor vehicle” who does not have a vehicle involved in the accident: 

“The two classes of insureds are: (1) the named insured, his spouse[,] and relatives residing in his household[] and (2) any person using, with the consent of the named insured, the motor vehicle to which the policy applies and a guest in the motor vehicle.” Concrete Servs., Inc. v. U.S. Fid. & Guar. Co., 331 S.C. 506, 509, 498 S.E.2d 865, 866 (1998). “A Class I insured is an insured or named insured who has a vehicle involved in the accident. An insured is a Class II insured if none of his vehicles are involved in the accident.” Ohio Cas. Ins. Co., 323 S.C. at 211, 473 S.E.2d at 845 (citation omitted). “Only a Class I insured may stack.” Id.

Ownership of the vehicle does not determine whether you are allowed to stack policies – SC law says that you can stack policies if you are a Class I insured, regardless of who owns the vehicle. 

Although SC law permits you to stack insurance policies in SC, can your insurance company limit stacking in your contract? 

Can Stacking of Insurance Policies be Prohibited by Your Insurance Contract? 

Stacking cannot be prohibited by your insurance contract in situations where SC law says that stacking is permitted:

When interpreting an insurance contract, statutory provisions are considered part of the contract as a matter of law. Carter, 406 S.C. at 615, 753 S.E.2d at 518. “To the extent a policy conflicts with an applicable statute, the statute prevails.” Lincoln Gen. Ins. Co. v. Progressive N. Ins. Co., 406 S.C. 534, 539, 753 S.E.2d 437, 440 (Ct. App. 2013).

If the language in an insurance policy conflicts with SC law, then that language in the insurance contract is void and unenforceable. So, if SC’s UIM statute says stacking is permitted, the insurance company cannot prohibit it by contract or deny your claim – even when you are seeking to stack multiple UIM policies:

[UIM] coverage is controlled by and subject to our [UIM] act, and any insurance policy provisions inconsistent therewith are void, and the relevant statutory provisions prevail as if embodied in the policy…

“Generally, stacking of additional coverage for which the insured has contracted is permitted unless limited by statute or a valid policy provision.” Ruppe v. Auto-Owners Ins. Co., 329 S.C. 402, 404, 496 S.E.2d 631, 631-32 (1998). “Construing specific statutory language, we have held an insured is entitled to stack [UIM] . . . coverage in an amount no greater than the amount of coverage on the vehicle involved in the accident. To this extent, stacking cannot be contractually prohibited.”

Although there are circumstances where stacking may be prohibited under SC law (for a Class II insured, for example, or “in an amount… greater than the amount of coverage on the vehicle involved in the accident”), in most cases you are entitled to stack multiple UIM policies if the other driver’s insurance does not cover your full damages. 

Auto Accident Attorneys in Myrtle Beach, SC

Your Myrtle Beach personal injury lawyer at Coastal Law will help you to determine all potential sources of recovery, including stacking insurance policies whenever possible to ensure you receive full and fair compensation.

Call Coastal Law now at (843) 488-5000 or message us through our website to speak with an experienced auto accident attorney in Myrtle Beach today. 

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