Bardsley v. Government Employees Insurance
747 S.E.2d 436
S.C.2013Background
- A high-speed crash by John Ludwig destroyed part of Francina Bardsley’s home and killed her husband; Ludwig’s liability insurers (Auto Owners and Hartford) paid $3 million to settle the wrongful-death claim.
- The Bardsleys had State Farm homeowner coverage that paid $127,813.49 for property damage and asserted subrogation against the $3 million settlement; Francina later settled State Farm’s subrogation claim.
- Francina had GEICO auto insurance providing $300,000 UIM bodily-injury and $100,000 UIM property-damage coverage; GEICO paid the $300,000 BI UIM but refused the $100,000 PD UIM.
- GEICO’s UIM policy contains an "other insurance" clause making UIM property coverage excess over other valid and collectible insurance; State Farm’s policy contains a pro rata clause.
- Francina sued for declaratory judgment; the circuit court granted summary judgment for Francina finding GEICO’s "other insurance" clause ambiguous and invalid under the collateral source rule (and possibly public policy).
- The South Carolina Supreme Court reversed, holding the clause unambiguous, not contrary to public policy, and not invalidated by the collateral source rule, so GEICO’s UIM PD coverage is excess to State Farm and not triggered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GEICO’s "other insurance" clause is ambiguous | Bardsley: clause ambiguous on its face and conflicts with another exclusion; ambiguity favors insured | GEICO: clause is clear; "other valid and collectible insurance" has ordinary meaning | Court: circuit court erred — clause is not ambiguous; summary finding of ambiguity insufficient |
| Whether clause violates public policy (UIM statute) | Bardsley: clause undermines legislative intent of UIM protection | GEICO: UIM PD not mandated; clause simply makes coverage excess | Court: clause does not violate public policy; UIM PD not statutorily required and clause preserves coverage when no other insurance exists |
| Whether the collateral source rule prevents GEICO from invoking other insurance | Bardsley: State Farm is a collateral source; GEICO cannot reduce obligation by it | GEICO: collateral source rule applies to tortfeasors, not insurers; GEICO is not a wrongdoer | Court: collateral source rule applies to tortfeasors only; does not invalidate contractual "other insurance" clause; GEICO not barred from applying its excess clause |
| Priority between State Farm and GEICO coverage | Bardsley: GEICO should pay UIM PD because State Farm was (effectively) reimbursed from settlement | GEICO: State Farm (pro rata) is primary; GEICO (excess) pays only after exhaustion | Court: pro rata clause (State Farm) is primary; excess clause (GEICO) is secondary; because State Farm limits were not exhausted, GEICO owes nothing |
Key Cases Cited
- Gregory v. Citizens & S. Nat’l Bank of S.C., 320 S.C. 90 (discusses collateral source rule applying to wrongdoers)
- Estate of Rattenni v. Grainger, 298 S.C. 276 (UIM benefits are a collateral source)
- Diamond State Ins. Co. v. Homestead Indus., Inc., 318 S.C. 231 (conflicting policy terms construed for insured)
- Ellie, Inc. v. Miccichi, 358 S.C. 78 (standard for contractual ambiguity)
- S.C. Ins. Co. v. Fid. & Guar. Ins. Underwriters Inc., 327 S.C. 207 (characterizes pro rata vs. excess clauses and priority)
- Bruce v. Blalock, 241 S.C. 155 (definition of ambiguous contract language)