In 2017, Bryan sold his motorcycle and purchased another motorcycle, a 2016 Harley Davidson, that was added to the policy. At the time, Wayne had Bryan added as named insured to the policy. Progressive did not offer Bryan any optional coverages.

Later in 2017, Bryan was involved in an accident while driving his 2016 Harley Davidson. Bryan ultimately made a claim against Progressive to reform the policy to include UIM coverage based on Progressive's failure to offer him the optional coverage.

Progressive contended that adding Bryan as a named insured was a change to an existing policy and, as a result, Progressive was not required to offer Bryan UIM coverage.

The U.S. District Court for the District of South Carolina certified the following questions to the Supreme Court of South Carolina:

• Whether the addition of a named insured (“Added Named Insured”) to an existing insurance policy under which the Added Named Insured was previously a resident[-]relative insured is a “change” under [Section 38-77-350(C) of the South Carolina Code] and, consequently, does not require an additional offer of optional coverages if an offer that satisfies [Section 38-77- 350(A) and (B) of the South Carolina Code] was previously made to the named insured who originally applied for the policy (Original Named Insured)?
• If the insurer was required but failed to make a separate offer of optional coverage to the Added Named Insured, whether reformation should be limited to vehicle(s) in which the Added Named Insured has an insurable interest? 

South Carolina law provides:

An automobile insurer is not required to make a new offer of coverage on any automobile insurance policy which renews, extends, changes, supersedes, or replaces an existing policy.

S.C. Code Ann. § 38-77-350(C). 

The South Carolina Supreme Court's Decision

The South Carolina Supreme Court answered the first certified question “Yes,” holding that the addition of Bryan as a named insured was a change to an existing policy pursuant to Section 38-77-350(C) and, accordingly, that Progressive did not have to make an additional offer of UIM coverage to Bryan. Having answered the first certified question “yes,” the court did not reach the second question.

In its decision, the court explained that South Carolina law provides that automobile insurance carriers must offer, “at the option of the insured, [UIM] coverage up to the limits of the insured liability coverage.” Moreover, the court continued, if an insurer fails to make a meaningful offer of UIM coverage to the insured, “the policy will be reformed, by operation of law, to include UIM coverage up to the limits of liability insurance carried by the insured.”

The court then ruled that, from the “plain language” of Section 38-77-350(C), it was “clear” that an insurance company “need not make a new offer of UIM coverage” in the case of a “change” to “an existing policy.”

The court acknowledged that, in the context of Section 38-77-350(C), the word “change” was ambiguous and that not all “changes” were the same. It then declared that an insurance company must make a new offer of coverage “when there has been a material change to the policy.”

The court held that adding Bryan as an additional named insured “was not a material change” that triggered the requirement to offer UIM coverage to Bryan. Rather, it reasoned, adding Bryan as an additional named insured “was a change to an existing policy” within the meaning of Section 38-77-350(C).

As the court observed, “no new policy was created” but, rather, an existing policy that covered Bryan's motorcycle was changed to add Bryan as an additional named insured. “The coverage and policy limits did not change, for Bryan and his motorcycle were insured before and after the change,” the court noted. Moreover, it said, adding Bryan as a named insured did not “supersede” or “replace” his father's policy and doing so was “properly characterized as a change to an existing policy” within the meaning of Section 38-77-350(C).

Consequently, the court concluded, Progressive was not required to reoffer UIM coverage.

The case is Progressive Direct Ins. Co. v. Reeves, No. 27909 (S.C. July 24, 2019). Attorneys involved include: J.R. Murphy and Megan Walker, both of Murphy & Grantland, P.A., of Columbia, for Plaintiff. William R. Padget and Carl D. Hiller, both of Finkel Law Firm, LLC, of Columbia, for Defendant.

Insurance Coverage Law Center Comment

Other courts have reached the same result. See, e.g., Kerr v. State FarmMut. Auto. Ins. Co., 434 So. 2d 970, 971 (Fla. Ct. App. 1983) (“[T]he test for whether a new rejection of UM coverage had to be obtained is whether the original policy has been changed in any material respect.” (internal quotation marks omitted)); Allstate Ins. Co. v. Kaneshiro , 998 P.2d 490, 497 (Haw. 2000) (“[W]hen a material change is made to an existing policy, the resulting policy is not a 'renewal or replacement policy' and a new offer of UM/UIM coverage is required.”); Wilkinson v. La. Indem./Patterson Ins., 682 So. 2d 1296, 1300 (La. Ct. App. 1996) (finding husband's addition of wife as a named insured did not have the effect of altering coverage, and, thus was not a material change and no new offer of optional coverage was required).