State insurance pools or quasi-state entities that offer insurance are often treated differently than typical private insurance companies. Since many of these insurance entities are set up to provide insurance to other government entities, especially municipalities and local school districts, it is important to recognize that state laws often treat these entities differently than private insurers.
Government insurance pools and entities may have different limitations and be immune from non-contractual or unfaithful litigation. It is important to examine the legal implications of these devices. We have found that some quasi-state pools and leagues treat their members or subscribers policyholders much worse than typical insurance companies in terms of property insurance claims while providing excellent claims for service liability. Municipalities, school districts and other local authorities should be equally interested in the quality of fast and complete payment of property insurance losses as much as all premium savings.
Let me give an example in South Carolina of how these state insurance entities are treated differently. South Carolina Code § 1
With the exception of what is stated in section 15-78-120 (a) (4), the total amount recovered below for a single event does not exceed six hundred thousand dollars regardless of the number of bodies or political subdivisions or claims or documents involved.
Furthermore, the SC Code § 15-78-120 (b) states that penalties, exemplifying and interest before judgment are not available.
In the Reeves v. South Carolina Municipal Insurance and Risk Financing Fund 1 the South Carolina Supreme Court directly addressed the status of the policyholder and the applicability of the Torts Act to the accompanying claim. The Supreme Court of South Carolina has found that SCMIRF is a "political subdivision" as defined in the Torts Claim Act, and states:
SCMIRF is a voluntary self-insurance pool created by state municipalities with state permission and action. The law and the South Carolina Constitution authorize municipalities and other political subdivisions to establish merged self-insurance funds. It would be an absurd result for the legislator to create a system in which a municipality loses its status as a political subdivision under the law – and thus loses the protection of the law – when it joins other municipalities in order to fulfill statutory obligations.
Also in Reeves the insured claimed that regardless of whether SCMIRF was a political subdivision, the Torts Act had no effect on liability for a breach of the contract claim; here, however, the court disagreed and found that the limitations of the Torts Act were applied based on the specific facts of the case, namely that the parties proposed to dispute only the amount of coverage and the applicability of the Torts Act to an unfaithful claim. against SCMIRF, not breach of contract.
Furthermore, the South Carolina Tort Claim Act limitation statute for damages claims is two years. 2 So if the insurance pool acts in bad faith, the time to bring an action is at least one year less than the normal limitation period and the state policyholder is limited to the damages much more than if it were a private insurance company.
Thought For The Day
From my very first day in the mayor's office, I have worked closely with councilors who share our vision of a town hall that truly protects taxpayers and cares. … yes … about the little things that make a big difference in people's lives.
1 Reeves ex rel. Estate of Reeves v. S.C. Mouth. Ins. & Risk Fin. Fund [Scmirf] 427 S.C. 613, 832 S.E.2d 312 (S.C. App. 2019).
2 S.C. Code § 15-78-110.