SC Sup. Ct. holds public policy is not offended by an automobile policy provision which limits the portability of basic “at-home” UIM coverage

In Burgess v. Nationwide, the South Carolina Supreme Court considered whether public policy is offended by an automobile insurance policy provision that limits basic UIM portability when an insured is involved in an accident while in a vehicle he owns, but does not insure under the policy? The Court held that it is not.

UIM coverage is entirely voluntary, and permits insureds, at their option, to
purchase insurance coverage for situations where they are injured by an at-fault
driver who does not carry sufficient liability insurance to cover the insureds’
damages. Essentially, the insured is buying insurance coverage for situations,
as where he is a passenger in another’s vehicle or is a pedestrian, where he
cannot otherwise insure himself. When, however, the insured is driving his own
vehicle, he has the ability to decide whether to purchase voluntary UIM
coverage. Burgess chose not to do so when insuring his motorcycle.

. . .

Upholding this limit on portability encourages persons to purchase UIM
insurance on all their vehicles. To hold, as did the Court of Appeals, that
basic UIM is portable even in this situation permits an individual who owns
multiple vehicles to purchase UIM insurance on only one vehicle, yet have basic
UIM coverage on all. We find this result undesirable.

However, in Natiowide v. Erwood, the Court reached a different result on UM coverage: "We find that the mandatory nature of this coverage distinguishes it from the voluntary UIM coverage at issue in Burgess, and that pubic policy requires that basic UM coverage be afforded to Erwood even when she is a passenger on her spouse’s uninsured motorcycle." Chief Justice Toal and Justice Burnett dissented. Justice Toal would have held that uninsured motorist coverage is not “portable” for a party who is injured while operating or while a passenger of a vehicle of which the party would be an insured had he or she purchased insurance coverage.

Hence, the difference in the two case is the mandatory nature of UM and the voluntary nature of UIM.