UPDATED @ 5:00 p.m.
A South Carolina Supreme Court opinion issued earlier this year has sparked debate in the state Senate this week. The Court, in what is called the “Crossman” case out of Myrtle Beach, reversed its own case law and made it harder to get insurance coverage or payout for defective construction work. That may change again, however, as the state’s highest court has agreed to rehear the case.
In the meantime, state senators have passed to second reading a bill to clarify language that the court used to construe the case for the insurance companies. The court held in Crossman Communities v. Harleysville Mutual that faulty workmanship resulting in $16.8 million in water damage to condominiums in Myrtle Beach did not constitute an “occurrence,” and said the contractor could not recoup the damages he paid to his clients, though he believed he had purchased insurance to cover his claims.
Since there is no clear or binding definition of “occurrence” in this ruling, bill sponsor Glenn McConnell (R-Charleston) wants to clear it up in state law, and “undo” what has been allowed in the Crossman ruling:
Fundamental fairness dictates that if they told those people that they were buying coverage for that, then they ought to get what they paid for and what was represented. And they collected those big premiums, knowing they were exposed to that and now they want to hike off into the sunset with hundreds and millions of dollars in profits and the victims are left there to fend for themselves.
Senate Finance Chair Hugh Leatherman says insurance companies understand what is called “the long tail.”
“That’s where the insurance company knows, it may be five years, ten years, fifteen more, they’re still on the hook. You heard of that.”
“Yes sir,” says McConnell. “Don’t you think they know that? They’re good business people. They’re not in the business of being the Santa Claus of America.”
Sen. Larry Martin (R-Pickens) argued with McConnell that he had never heard of an issue with such coverage until now. He questioned that the real problem may be with how the contract was written and may not need intervention into current case law.
The other senator who voted against the measure, Harvey Peeler said, “It befuddles me that we spent all this time on this legislation.”