We granted certiorari to consider this Court of Appeals decision finding invalid an automobile insurance policy purporting to limit the portability оf underinsured motorist (UIM) coverage.
Burgess v. Nationwide Mut. Ins. Co.,
FACTS
Burgess was injured in a motor vehicle accident while operating his motorcycle, which was insured by Alpha Propеrty and Casualty Insurance Company. Burgess’s damages exceeded the at-fault driver’s coverage, and Burgess had no UIM coverage on the motorcycle. He did, however, own three other vehicles insured by Nationwide, each of which had $25,000 in UIM coverage.
Nationwide declined Burgess’ UIM claim, rеlying on this policy provision:
3. If a vehicle owned by you or a relative is involved in an accident where you or a relative sustains bodily injury or property damage, this policy shall:
a) be primary if the involved vehicle is your auto described on this policy; or
b) be excess if the involved vehicle is not your auto described on this policy. The amount of coverage applicable under this policy shall be the lesser of the coverage limits under this policy or the coverage limits on the vehicle involved in the accident.
Burgess brought this declaratory judgment action, and the circuit сourt held that Nationwide must pay Burgess $15,000 in UIM benefits under one of its policies insuring Burgess’ “at-home” vehicles. The Court of Appeals affirmed, and we granted Nationwide’s petition for a writ of certiorari.
ISSUE
Whether the Court of Appeals was correct when it concluded Nationwide’s policy provisiоn purporting to limit the portability UIM coverage is void because it violates S.C.Code Ann. § 38-77-160 (2002)?
ANALYSIS
The Court of Appeals first held that UIM, like uninsured motorist (UM) coverage, is “personal and portable,” that is, the coverage follows the individual insured and not the insured vehicle.
See Hogan v. Home Ins. Co.,
The Court of Appeals then analyzed the impact of S.C.Code Ann. § 38-77-160 on the issue of the policy provision’s validity. In relevant part, this statute provides:
Autоmobile insurance carriers shall offer, at the option of the insured, uninsured motorist coverage up to the limits of the insured’s liability coverage in addition to the mandatory coverage prescribed by Section 38-77-150. Such carriers shall also offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess оf the liability limits carried by an at-fault insured or underinsured motorist or in excess of any damages cap or limitation imposed by statute. If, however, an insured оr named insured is protected by uninsured or underinsured motorist coverage in excess of the basiclimits, the policy shall provide that the insured or namеd insured is protected only to the extent of the coverage he has on the vehicle involved in the accident.....
(bold in Court of Appeals’ opinion).
The Court of Appeals held the “If, however” sentence in § 38-77-160 applied only to stacking cases, found the issue here was not stacking but rather Nationwide’s attempt to “excludе basic UIM coverage in a situation where the vehicle involved in the collision is owned by the insured but not specifically covered by a UIM poliсy,” and concluded that nothing in the statute permitted an insurer to exclude basic UIM coverage under these circumstances. Furthermore, the cоurt held that the endorsement purporting to preclude Burgess’s recovery of basic UIM was void as against public policy because § 38-77-160 only permits an insurer to limit excess UIM coverage.
We begin by noting that we agree with the Court of Appeals that, as a general proposition, UIM covеrage follows the individual insured rather than the vehicle insured, that is, UIM coverage, like UM, is “personal and portable.” See Hogan v. Home Ins. Co. supra. Further, we agree with the Court of Aрpeals that the “If, however” sentence in § 38-77-160, relied upon by Nationwide here, does not literally apply to these facts since Burgess is not attempting to stack excess UIM coverage from his Nationwide policy. 1 In our view, however, this statutory language does provide support for Natiоnwide’s contention that its policy provision does not violate public policy. The “If, however” sentence in § 38-77-160 evinces the legislature’s intent, in a stacking situation, to bind the insured to the amount of UIM coverage he chose to purchase in the policy covering the vehicle involved in thе accident. Thus, the statute itself contains a limit on the “portability” of UIM coverage.
Neither § 38-77-160 nor our prior decisions decide the issue presеnted here: Is public policy offended by an
An automobile insurance company, in setting its rates, bases those rates at leаst in part on the probabilities involving the insured and the vehicle(s) he is insuring. Where, as here, the vehicle is not insured by the company from whom coverage is sought, the carrier cannot accurately calculate its risks. It is one thing to insure against “unknowable” risks, such as the chance that one will be injured by an underinsured at-fault driver while a passenger in another’s vehicle, or as a pedestrian; it is an entirely different calculus where a company’s insured owns and operates a motor vehicle, especially a motorcycle, not insured by the carrier making its risk assessments.
We hold that public рolicy is not offended by an automobile insurance policy provision which limits the portability of basic “at-home” UIM coverage when the insured hаs a vehicle involved in the accident.
Compare State Farm Mut. Auto. Ins. Co. v. Calcutt,
The decision of the Court of Appeals requiring Nationwide to provide Burgess with $15,000 UIM benefits is
REVERSED.
Notes
. Stacking is defined "as the insured’s recovery of damages under more than one policy until all of his damages are satisfied or the limits of all available policies are met.”
Giles v. Whitaker,