Subrogation in South Carolina Part II: Proper Parties to the Action

Subrogation in South Carolina Series: Part II
Post by Lee Floyd
An initial question when evaluating and bringing a subrogation claim is who are the proper parties to identify as bringing suit?  While ordinarily a fairly simple question in most litigation, this issue creates numerous complexities when dealing with subrogation claims, and resolving these issues can have a substantial impact on the perceived value of a subrogation claim.
The impact of the named parties is apparent when you consider whether a jury will be directly informed that not only is insurance involved, but any award will be for the partial or complete benefit of an insurance company.  Further, because South Carolina law firmly prohibits any reference to the existence of (or non-existence of) liability insurance, the jury will not expressly know whether the burden of an award will be placed on the defendant or the defendant’s insurance carrier.  This scenario can easily present a situation in which a jury perceives the case as one where a multi-million dollar insurance company is asking to recover damages from a small company or an individual.  In short, the parties may present a picture of Goliath pursuing David.
While some issues remain unanswered in South Carolina, the following general rules exist for the proper parties for bringing a subrogation claim.  Each depends upon the total amount of the loss the insurer has paid.
  1. The insured alone may bring the claim:  It appears that in most situations the subrogation claim may be brought exclusively in the name of the insured.  In South Carolina, an insured is the only proper party to institute a subrogation claim where an insurer has not yet paid for the loss or disputes coverage depending on the outcome of the claim against the third party.  While obvious in its reasoning, this rule has important implications: an insurer appears capable of always bringing a subrogation claim solely listing the insured as the plaintiff and still retains control over prosecution of the claim under the terms of the insurance policy. Using this rationale, there is no need to identify the plaintiff as “insurance company X as subrogee of” or similar language.
  1. The insured and the insurer are both proper parties to the action: This approach has been recognized in South Carolina where an insurer pays only a portion of the insured’s loss due to the actions of the defendant. This rule is consistent with South Carolina’s recognition of equitable subrogation as automatic on a pro-rata basis.
  1. The insurer may bring the action solely in its own name: An insurer may file a Complaint solely in its own name only where it is has paid the total loss.  It is unclear, in South Carolina, whether this requires the insurer to have waived any amount due under the policy for the deductible or if this amount is excluded from calculating the total loss.

While this issue can be overlooked, determining the proper parties to Complaint in a subrogation claim may have significant ramifications on how the claim is presented to a jury and the perceived value of a claim.  As it currently exists, South Carolina law appears to permit an insurer to institute a subrogation claim in solely the insured’s name in most, if not all, circumstances.  It appears that this approach may be underutilized or overlooked in current practice.

This blog post is the second in a series by Collins & Lacy attorney Lee Floyd that seeks to identify some common issues that arise in subrogation claims for property damage and provide some general guidelines for resolving those issues.  Read the first post Subrogation Claims in South Carolina.  To learn more about how Collins & Lacy handles subrogation claims, visit our subrogation webpage.
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.