After a serious crash the first number that matters is the at-fault driver’s liability limit, because in most cases that is the ceiling on what their insurer will pay. South Carolina’s required minimum, set by S.C. Code § 38-77-140, is far below the cost of a hospital stay, and many drivers carry little more than that. Umbrella insurance in South Carolina is the second layer some people buy above their auto and homeowners policies, and when the at-fault driver has one, the ceiling on your claim moves. When you are the one who has the umbrella, the answer is different, and it surprises people.

How umbrella insurance in South Carolina works

An umbrella policy sits on top of a primary policy. The South Carolina Supreme Court described the structure in Todd v. Federated Mutual Insurance Co. (1991), quoting an Alabama decision it found persuasive: an umbrella policy “is fundamentally excess insurance designed to protect against catastrophic loss. Before an umbrella policy is issued, a primary policy (the ’underlying policy’) must be in existence . . . . The umbrella policy assumes a risk of much less frequent occurrence, i.e., the risk of judgments in excess of primary policy limits.” In plain terms: the auto policy pays first, up to its limit, and the umbrella pays what is left of a covered claim, up to its own limit.

Because it is excess coverage, an umbrella policy is usually written in larger round numbers than an auto policy, and it usually follows the auto policy’s terms for what is covered. That is why an injured person’s lawyer asks early, and in writing, whether the at-fault driver has one.

When the at-fault driver has an umbrella policy

This is the situation in which an umbrella changes your case. South Carolina defines an “underinsured motor vehicle” in S.C. Code § 38-77-30 as one whose liability insurance is at least the statutory minimum but “less than the amount of the insureds’ damages.” When the at-fault driver’s auto limits are exhausted and an umbrella exists, the umbrella carrier steps in before you have to turn to your own underinsured motorist coverage at all.

The Supreme Court’s decision in Bardsley v. Government Employees Insurance Co. (2013) shows the layers in operation. A speeding driver left the road and crashed into a home, killing the owner. The driver and his company were insured for $1 million in automobile liability coverage and $2 million in umbrella liability coverage, and the wrongful death claim settled for the full $3 million from both carriers. The case then turned on the family’s own underinsured motorist coverage, and the court held that the family’s UIM property damage coverage was excess to their homeowners policy and did not pay because the homeowners limits had not been exhausted. The lesson for an injured person is in the sequence: the at-fault side’s auto and umbrella limits came first, and every other coverage was measured against what was left.

• —Ask for the umbrella early. A policy-limits tender from the auto carrier is not the end of the claim if an umbrella exists. Our post on rejecting an insurance settlement offer explains what happens after a limits offer is declined.
• —Document the full loss. An umbrella carrier pays only what exceeds the primary limits, so the value of the claim has to be proved above that line. Our guide to what damages you can claim covers the categories.
• —Expect a second adjuster. The umbrella carrier is often a different company with its own adjuster and its own view of the case. Our post on how insurance companies handle auto accident claims describes how those conversations go.

When you have the umbrella policy

Here the news is less good. South Carolina requires every automobile policy to carry uninsured motorist coverage under S.C. Code § 38-77-150, and S.C. Code § 38-77-160 requires the auto carrier to offer additional uninsured and underinsured motorist coverage “up to the limits of the insured’s liability coverage.” Those protections are the ones that pay you when the driver who hit you has no insurance or too little. But S.C. Code § 38-77-161 provides: “No uninsured or underinsured motorist coverage need be provided in this State by any excess or umbrella policy of insurance.”

The Supreme Court reached the same conclusion for policies written before that statute in Todd, holding that umbrella policies “were not required to provide uninsured motorist coverage” because “the underlying primary policy provides the insured with all the benefits accorded under our uninsured motorist statutes.” The practical result is that a person who bought an umbrella to protect the family has protected the family against claims by others, not against a badly insured driver who injures them. Unless the umbrella policy expressly includes uninsured or underinsured motorist coverage, and in South Carolina it need not, the UM and UIM limits on the auto policy are what pay.

• —Read the declarations page, not the brochure. If your umbrella says nothing about uninsured or underinsured motorists, assume it provides none.
• —Your UIM limits are the number that matters. Under § 38-77-160 they can be as high as your liability limits, and the carrier must make a meaningful offer of them. Our post on what full coverage actually includes explains the difference between liability, UM and UIM.
• —Stacking has limits too. Where an insured has UM or UIM above the basic limits, § 38-77-160 provides that the insured “is protected only to the extent of the coverage he has on the vehicle involved in the accident,” a rule the courts have applied strictly.

What to do if you have been seriously hurt

Umbrella coverage on either side is found by asking, and the answers come faster when a lawyer asks in the right form. Get the at-fault driver’s declarations pages, including any excess or umbrella policy, before discussing settlement. Get your own auto and umbrella declarations and read what they say about uninsured and underinsured motorists. Do not sign a release for the auto carrier’s limits until the existence of an umbrella has been confirmed or ruled out, and remember that an underinsured motorist claim in South Carolina carries its own notice requirements under § 38-77-160. Our post on why you need a lawyer after a car accident explains how those steps fit together.

Frequently asked questions

Does the other driver have to tell me whether they have an umbrella policy?

Not on the roadside. Once a claim or lawsuit is under way, coverage information is obtained through the claim process and, in litigation, through discovery. A lawyer knows how to ask.

Does my umbrella policy cover me if an uninsured driver hits me?

Only if it expressly says so. S.C. Code § 38-77-161 provides that no uninsured or underinsured motorist coverage need be provided by an excess or umbrella policy, and most umbrella policies do not include it. Your auto policy’s UM and UIM coverage is what applies.

The at-fault driver’s insurer offered its policy limits. Should I take it?

Not before confirming whether an umbrella or other excess policy exists and what your own UIM coverage is. A limits tender can be a good outcome or a fraction of the claim; the paperwork tells you which.

Is an umbrella policy the same as underinsured motorist coverage?

No. An umbrella pays claims made against the person who bought it. Underinsured motorist coverage pays the person who bought it when an at-fault driver’s limits are too low. They protect in opposite directions.

How long do I have to bring a claim?

The general limitations period for a South Carolina personal injury claim is three years from the injury, and an underinsured motorist claim has procedural requirements of its own. Talk to a lawyer well before then.

Talk to a Charleston personal injury attorney

Finding every layer of coverage is part of valuing a serious injury case, and the umbrella layer is the one most often missed. Klok Law handles personal injury claims across Charleston, Mount Pleasant, Berkeley and Dorchester counties. Call Klok Law at (843) 701-1695 before you accept any policy-limits offer.

This article is for general information only and is not legal advice. For advice about your specific situation, contact Klok Law at (843) 701-1695.