Q. What happens if my insurance company becomes insolvent?

A. The South Carolina Property & Casualty lnsurance Guaranty Association (SCPCIGA) has been set up by the legislature to help protect you. Not all insurance companies and types of insurance are covered, but generally, homeowners , automobile, workers’ compensation and other property and casualty lines are covered.

Q.  What types of insurance are not covered by the South Carolina Property & Casualty Insurance Guaranty Act (the Act)?

A.  In Section 38-31-30, the Act states that it does not apply to:

• 1) life, annuity, health, or accident insurance.  Refer any questions about these lines to:
  South Carolina Life and Health Insurance Guaranty Association
  PO Box 706, Orangeburg, SC, 29115-0706
  803-536-9874.
• 2) mortgage guaranty insurance
• 3) fidelity or surety bonds;
• 4) credit insurance;
• 5) insurance of warranties or service contracts;
• 6) insurance written on a retroactive basis;
• 7) title insurance;
• 8) ocean marine insurance;
• 9) any transaction wherein there is not a transfer of risk.

For more information regarding exclusions and limitations under the Act, refer to Act, or to this website.

Q. Who do I contact to see if my claim is covered?

A. South Carolina Property & Casualty lnsurance Guaranty Association, 240 Stoneridge Drive, Suite 101, Columbia, SC, 29202, 803-799-1560.

Q. How do I know if I am covered by SCPCIGA?

A. Your insurance company must be found to be both insolvent and placed in liquidation by court order.  The insurer must also be an admitted company, licensed by the South Carolina Department of Insurance.  Either the insured or claimant must be a resident of South Carolina, or the property involved must be in South Carolina.

Q. I am a business owner. Will SCPClGA protect me?

A. Yes, unless you are very large—over $25,000,000.00 of net worth for third party claims or $10,000,000.00 for first party claims.

Q. My car has been damaged by another driver, and I was injured—will SCPCIGA pay for my damages?

A. Assuming the other driver’s insurance company is insolvent, and subject to certain exceptions, SCPClGA pays up to $300,000.00 for bodily injury/property damage which constitute a covered claim. You may also be fully protected under your uninsured motorist coverage. Contact your agent to inquire.

Q. My house burned—is it covered?

A. If it is a covered claim, up to $300,000.00 may be paid.

Q. I just paid my premium—do I lose it ?

A. Unearned premiums are covered with a deductible of $100.00

Q. What are the limits on coverage?

A. Generally, the limit is $300,000.00, except for workers’ compensation, which has no limit. There are other important provisions which limit coverage.  See the Act for details.

Q. Should I cancel existing coverage?

A. First, consult your agent. Generally, it is in your best interest to replace coverage in an insolvent company as soon as possible, but your coverage will be cancelled in any event, effective 30 days after the date of Liquidation.

Q. When can I expect help from SCPCIGA?

A. SCPClGA can act only after it is triggered by an Order of Insolvency and Liquidation and it receives the claim files from the insurance carrier’s liquidator. Neither SCPClGA nor the South Carolina Department of lnsurance can help until the Commissioner in the insolvent insurer’s home state acts.

Q. Do I have to file a Proof of Claim with the Liquidator?

A. It is necessary to file a Proof of Claim to protect your rights to share in any distribution, particularly for claims that are not covered by SCPClGA or where there are “over the cap” claims.

Q. Can I get help from guaranty funds in other states?

A. In cases where there are “over the cap” claims in South Carolina, and where the insured or claimant may reside in another state, help may be available from guaranty funds in other states. Contact the guaranty funds of such other states, if you have any questions.

ATTORNEY INQUIRIES

Plaintiff Counsel:  The Act provides for a stay of litigation, but SCPClGA may choose not to seek such a stay if it can confirm coverage and get access to claim files.  Contact SCPClGA to discuss, or if you have a hardship case.

Defense Counsel of insolvent insurance companies:  Fees and expenses incurred prior to insolvency are not obligations of SCPCIGA, but counsel should make claim upon the liquidator for those amounts. No fees and expenses will be paid by SCPClGA unless expressly authorized by SCPCIGA.  SCPClGA will be in touch to evaluate moving of defense files.  In an emergency or hardship case, please contact us immediately. Coverage is limited in most cases.  In many cases where the insured has a large net worth or large deductible program, they may wish to handle their own claim files, and you should contact the insured to determine their position.

GENERAL TERMS

BAR DATE: The “bar date” is the last date a claimant may file a claim with an insolvent insurance company and SCPCIGA.  After that date the claimant is “barred” from filing further claims.  In South Carolina, the bar date is established as either the date set by the Liquidator, or eighteen (18) months after the insurance company is declared insolvent, whichever comes first.  An “insolvency date” is the date the court order of insolvency was signed.

UNEARNED PREMIUMS (“UEP”) : Companies and individuals covered by policies of insolvent insurers that are cancelled may have questions regarding reimbursement of premiums paid in advance of the insolvency date.  Obligations for unearned premiums are reimbursed by SCPClGA only when a loss run report is received by SCPClGA from the liquidator for that insolvency.  When loss run reports are received, a deductible of $100.00 is applied.  SCPClGA does not have access to the records necessary to compute UEP. Finance companies are reimbursed (a) if the liquidator confirms the finance company relationship with the insured, (b) if the UEP due had not previously been reimbursed to the finance company by the insured, and (c) a loss report was received by SCPClGA from the liquidator confirming the amount.  Amounts due under retrospective rating plans are not covered.

NET WORTH: Insured companies with a combined net worth of $25 million or more as of

December 31 of the year prior to the insolvency order are required by the Act to reimburse SCPClGA for losses and expenses relating to claims paid on behalf of the insolvent insurance company.  Some large net worth insureds choose to handle their own claims.

LARGE DEDUCTIBLE: Based on the actual policy verbiage, companies with extremely large deductibies are required to reimburse SCPClGA for losses and expenses incurred on behalf of the insolvent Insurance company, or handle the claims themselves.

This summary is provided for information purposes only.  It does not replace the Act, nor does it cover every aspect of the Act.  SCPCIGA expressly denies any attempt herein to fully describe the Act, or to evaluate any specific question or situation.  SCPCIGA further does not waive its rights under the Act or any right to assert the conditions, exclusions and limitations of the Act, either in whole, or in part.    

For more information, you may review the South Carolina Property & Casualty Insurance Guaranty Act at 38-31-10 of the South Carolina Code of Laws, or on this website.  Information for other states may be found at the National Conference of Insurance Guaranty Funds website at ncigf.org.