S.C. High Court Nixes Felony ‘Step-Down’ Provisions in Auto Policies

A South Carolina Supreme Court opinion published in June nullifies auto insurance policy provisions that “step down” the maximum payout in instances where the insured was committing a felony or attempting to flee a law enforcement officer.

The 3-2 decision provides an additional $250,000 in insurance coverage to the victims of a 2008 crash that killed one person and seriously injured the driver and two passengers. It overturned a Court of Appeals ruling that found Nationwide was liable only for the $50,000 statutory minimum instead of the $300,000 policy limit.

Sharmin Christine Walls was a passenger in her car, a Chevrolet Lumina, while she and several friends drove around Anderson, South Carolina, on July 11, 2008. Korey Mayfield was driving.

When a South Carolina state trooper spotted Mayfield speeding and crossing the yellow center line, he flashed his emergency lights and siren. Instead of stopping, Mayfield sped up. The trooper followed in a chase where speeds exceeded 100 mph. The trooper abandoned pursuit, but Mayfield didn’t stop speeding even though the passengers begged him to. He lost control of the vehicle and crashed, killing passenger Christopher A. Timms, and injuring Walls, Deborah Timms and Randi Harper.

Mayfield was paralyzed; he pleaded guilty to vehicular homicide in 2010.

Walls’ Nationwide policy had limits of $300,000 per occurrence and $100,000 per person. It was agreed Mayfield was insured because he was a permissive user of the car, but Nationwide asserted it could reduce the total benefit to $50,000 because of a provision that reduced the benefit to the statutory minimum if the accident occurred while the insured was committing a felony or fleeing law enforcement.

The Supreme Court majority said its ruling was required by Section 38-77-140 of South Carolina law stating that any policy provision “which purports or seeks to limit or reduce the coverage afforded by the provisions required by this section is void.” The high court had previously cited the law to restrict the use of step-down provisions in Williams v. Government Employees Ins. Co. (2014).