You can’t stack that!
On May 22, 2014, Kristina Knight applied for an automobile insurance policy with Nationwide Insurance Company of America and completed an endorsement that listed Daniel Knight as an individual excluded from coverage under the policy. The excluded driver endorsement stated: “With this endorsement, all coverages in your policy are not in effect while Danny Knight is operating any motor vehicle.” Knight signed this page, on which she also checked the box confirming that “the excluded person has obtained insurance or other security to operate motor vehicles.”
On December 4, 2015, Nationwide issued the policy to Kristina, who was then engaged to Daniel. The policy insured a 1996 Ford Ranger and was effective from December 4, 2015, through June 4, 2016. Kristina and Daniel married later in December 2015.
On February 2, 2016, a vehicle struck and killed Daniel while he was riding his motorcycle. Daniel’s estate collected from the at-fault driver’s liability coverage, Daniel’s motorcycle policy, and the underinsured motorist coverage in Daniel’s automobile policy. Knight subsequently made a claim with Nationwide, seeking to stack her policy’s UIM limits with the other coverages. It was undisputed that the damages exceeded the policy’s coverage limits.
Nationwide filed an action seeking a declaration “that it is not required to provide any coverage, including but not limited to underinsured motorist coverage,” for any claim “made on account of the February 2, 2016 accident.” Knight answered and counterclaimed for breach of contract.
Nationwide moved for summary judgment; Knight filed a cross motion for summary judgment, arguing that Nationwide’s “insurance policy and [Excluded Driver] endorsement violate the public policy of the State of South Carolina.” The court granted Nationwide’s motion for summary judgment. Knight appealed.
On appeal, Knight argued that the plain language of a section of the South Carolina insurance code contemplated an exclusion from liability coverage only and that the application of the excluded driver endorsement to UIM coverage violated the state’s remedial public policy that requires insurers that write automobile coverage in the state to provide portable uninsured and underinsured motorist coverages to insureds and their families.
The court pointed out that UIM coverage is not mandatory in South Carolina and is sold as optional additional coverage with a motor vehicle liability policy. To interpret the relevant section of the insurance code to allow for the intentional exclusion of a resident relative from liability coverage but not optional UIM coverage would impose a forced construction of the statute that was not intended by state legislators.
Accordingly, the court found that the excluded driver endorsement validly excluded Daniel Knight from the UIM coverage Kristina Knight was seeking to stack. The trial court’s grant of summary judgment in favor of Nationwide was affirmed.
Nationwide Insurance Company of America v. Knight—Court of Appeals of South Carolina—December 16, 2019—AC No. 2017-001348.