On July 11, 2008, Sharmin Walls allowed Korey Mayfield to drive her Chevrolet Lumina. Walls, Randi Harper, and Christopher Timms were passengers in the vehicle. During the ride, a South Carolina Highway Patrol trooper activated his blue light, signaling for Mayfield to pull over. Instead of obeying the signal, Mayfield accelerated and then led the trooper on a high-speed chase with speeds at times exceeding 100 miles per hour. Walls, Harper, and Timms begged Mayfield to slow down, but he refused. Continuing to drive recklessly, Mayfield ultimately crashed the car, killing Timms and seriously injuring Walls and Harper. Mayfield, paralyzed from the single car collision, subsequently entered a plea to charges of reckless homicide.
Walls, Harper, and the Estate of Timms sought coverage from Ms. Walls’ automobile policy. The claimants soon learned that Sharmin Walls purchased and maintained liability insurance coverage in excess of the statutory minimums. Her Nationwide policy included bodily injury and property damage liability, and uninsured motorist coverage with limits of $100,000 per person and $300,000 per occurrence. Presumably, this policy would allow Walls, Harper, and Timms to each recover up to $100,000 while still remaining within the $300,000 per accident limit of the policy.
However, Nationwide did not pay Walls’ claim in accord with these limits. Instead, the insurer asserted it was required only to pay the statutory minimum as provided by section 38-77-140 of the Code of Laws of South Carolina, rather than the liability limits stated in the policy. Nationwide paid only $50,000 in total to the injured passengers, which is the statutory minimum provided by section 38-77-140. Nationwide relied on the policy’s “step-down” provision to pay only the minimum coverage of $50,000, as opposed to the $300,000 sought by Walls, Harper, and Timms collectively.
A step-down provision is a policy provision that purports to allow an insurer under certain circumstances to reduce the contracted-for declarations page coverage amount(s) down to the statutory minimum as designated by the state in which the policy is sold or is regulated.