At one time, South Carolina’s cities and towns could not be sued after a person’s injury. Municipal employees also could not be sued for any action they took while performing an official duty. These protections, known as sovereign immunity, ended in 1986, when the General Assembly replaced it with qualified, limited liability by passing the SC Tort Claims Act.
The law allows South Carolina residents to bring suit against their state, county or municipality, but only in certain circumstances, and only for limited amounts of money. Currently, a person suing over a single occurrence of negligence cannot recover damages of more than $300,000. The total damages recovered from the government for any single occurrence can be no more than $600,000. These liability caps remain in place no matter how many individual claimants are involved.
The state set these caps at their present level in 1997, but lawmakers have proposed increasing the caps. A bill now under consideration, S82, would increase the limit of a loss to one person from a single occurrence to $500,000. It would increase the total limit for a loss arising out of a single occurrence to $1 million. The Senate passed S82 in March 2021, and the bill moved to the House of Representatives. Insurance professionals continue to review the bill to make recommendations for improving it in the House.
For the 132 municipalities in South Carolina that are SC Municipal Insurance and Risk Financing Fund members, the bill is projected to serve as a factor that would increase premiums if it passes. In recent years, premiums have been affected by an increase in catastrophic events since 2015, as well as increasingly expensive reinsurance markets. These trends are expected to continue. Reinsurance, the process by which insurers share risks to help reduce the costs of major claim expenses, is an important and necessary way to protect cities and towns from catastrophic loss. SCMIRF’s reinsurance expense has increased more than 100% since 2017 and represents a substantial portion of SCMIRF’s total expenses.
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