SC Supreme Court Finds Family Member Exclusion in Florida Auto Policy Does Not Violate SC Public Policy

A Florida automobile insurance policy’s family exclusion did not violate South Carolina public policy according to an April 2014 opinion of the South Carolina Supreme Court.

In Green v. United States Automobile Association Auto and Property Insurance Company, a motor vehicle accident occurred in South Carolina when a mother was making a left turn at an intersection and an oncoming car hit her Honda on the passenger’s side, severely injuring her minor child. The Honda was insured under a USAA policy issued in Florida to Green, the mother’s husband and father of the child, and the Honda was registered in Florida. Nonetheless, the mother testified the family had resided in South Carolina continuously since 2004.

USAA declined coverage for the child’s injuries under the following exclusion:

There is no coverage for [Bodily Injury] for which a covered person becomes legally responsible to pay to a member of that covered person’s family residing in that covered person’s household.

Green, representing his injured child, filed for declaratory judgment to determine coverage under the policy. Applying Florida law, the circuit court granted summary judgment in favor of USAA. On appeal, Green argued (1) as a matter of public policy South Carolina courts should refuse to recognize the validity of the exclusion; and (2) the circuit court erred in finding there was no UIM coverage for his minor child under the policy. The court disagreed.

Public policy: It was undisputed that the exclusion was valid under Florida law and public policy. Instead, Green argued that because South Carolina has abolished parental immunity, enforcement of the exclusion violated South Carolina’s public policy. The court disagreed, indicating Green conflated two separate ideas in making the argument:

It is true, as [Green] argues, that South Carolina has abolished parental tort immunity. At issue here, however, is not the question of a common law immunity from suit but rather the enforceability of a contract provision. Appellant’s injured child may sue his mother in South Carolina for his injuries, but the insurance policy does not provide coverage for her. The abolition of parental immunity in this State does not create a public policy bar to enforcement of the valid family member exclusion in USAA’s Florida automobile insurance policy.

(internal citations omitted). Green further relied on South Carolina cases refusing to apply out-of-state intrafamily immunities as a matter of public policy. See Algie v. Algie, 261 S.C. 103, 198 S.E.2d 529 (1973) (refusing to dismiss suit based on Florida interspousal immunity doctrine). Again, the court noted Green conflated South Carolina’s public policy refusing to enforce other jurisdictions’ common law tort immunities with construction of an out-of-state insurance contract exclusion. Thus, the court found the exclusion, being valid under Florida statute and public policy, was not void as against South Carolina public policy.

UIM coverage: Green also sought to recover UIM, contending that because the child’s injuries exceeded the amount available under the liability of the contract, UIM was activated. The circuit court had granted summary judgment to USAA based on the policy’s definition of UIM, which explicitly excluded an automobile owned by or furnished to or available for the regular use of the named insured or a family member. The Honda was owned by Green and the mother, and the mother regularly drove the car. Although the argument was not properly before the court, the court noted the UIM provisions of the contract appeared neither void nor vague under Florida law, and thus found the circuit court did not err in granting USAA summary judgment on Green’s UIM claim. See Small v. New Hampshire Indem., 915 So.2d 714 (Fla. Dist. Ct. App. 2005) (rejecting arguments and construing similar policy language).

About Collins & Lacy, P.C.

Collins & Lacy is a statewide business defense firm in South Carolina that delivers legal representation for our clients through solid preparation, execution, and client-oriented service aimed at success. Located in the State’s capital city of Columbia, the firm represents local, regional and national clients in the areas of construction; hospitality/retail and entertainment law; insurance/bad faith; products liability; professional liability; commercial transportation; privacy, data management, and cybersecurity; mediation; criminal defense; and governmental affairs/issue advocacy.