United States: Insurers Take Heed: South Carolina Law Does Not Require Apportionment Of Punitive Damages

Last Updated: August 10 2018
Article by Cheryl D. Shoun

In a significant but not entirely novel ruling1, the South Carolina Supreme Court recently held that South Carolina law does not require the pro rata apportionment of punitive damages between damages sustained for bodily injury and those sustained for property damage, under an auto policy. GEICO v. Poole, Opinion No. 27821 (July 5, 2018).

The Pooles, riding in a car owned by Jennifer Poole's mother, were seriously injured when a drunk driver crossed the centerline and struck their vehicle. Jack Poole survived, but  Jennifer Poole died days later as a result of her injuries. The Pooles sustained only $1250 in property damage.

The carrier for the at-fault driver tendered its limits, following which the carrier for the vehicle in which the Pooles were riding tendered its underinsured motorist (UIM) limits for bodily injury. Recovery was then sought from the Poole's carrier, GEICO, which provided a split limits UIM policy – bodily injury coverage up to $100,000 per person and $50,000 property damage. GEICO tendered its maximum UIM coverage for bodily injury. Anticipating a significant punitive damages recovery, the Pooles made a demand for payment of property damage limits. GEICO refused and filed a declaratory judgment action in the United States District Court, seeking a determination it was not liable to pay any punitive damages pursuant to its UIM property damage coverage, reasoning the Pooles' UIM damages resulted only from bodily injury.

Upon the filing of cross motions for summary judgment, the District Court certified the following question to the SC Supreme Court:

Under SC law, when an insured seeks coverage under an auto policy, must
punitive damages be apportioned pro rata between damages sustained for
bodily injury and those sustained for property damage under a split limits

Significantly, the court's answer to this question was no.

In support of its position, GEICO argued that because the insurance code allows for split limits policies, punitive damages must be allocated between damages for bodily injury and those for property damage; otherwise, failure to allocate punitive damages would effectively transform the split limits policy into a combined single limit policy. The Court rejected GEICO's argument. Looking squarely to the statutory language addressing UIM coverage, the court emphasized the trigger for UIM coverage is an event that results in "damages," which by definition includes both actual and punitive, that exceed the limits of coverage for the at-fault driver.  The statutes do not further address the apportionment of punitive damages.

GEICO also argued the failure to allocate punitive damages is a violation of constitutional due process. The court likewise rejected this position. GEICO entered into a contract to provide UIM coverage, pursuant to which it was aware of its exposure to pay actual and punitive damages up to the contractual limit. Thus, there can be no argument relative to the propriety or foreseeability of punitive damages.

GEICO next argued the insurance contract required pro rata apportionment of punitive damages. The court chose not to address that argument, deferring to the district court and its ability to fully review the insurance contract as well as any testimony or documents relevant to any necessary interpretation thereof.

Finally, GEICO relied on a public policy argument, asserting it supports allocation. The court once again deferred, this time to the General Assembly.

Although the court was careful to note its mindfulness of the reasons for and enforceability of split limits policies, this opinion seems to call into question the application and perhaps even the viability of such policies.  The court took the time to articulate a well-reasoned analysis of the underlying principles of punitive damages, upon which it relied in reaching its conclusion. Specifically, they are designed to punish a wrongdoer and to deter him and others from similar behavior. However, the court notes, they are also intended to provide a level of compensation to plaintiffs for the intentional violation of their private rights, separate and apart from compensatory damages. While actual damages can easily be determined to result from either bodily injury or property damages, punitive damages are not likewise distinguishable. Therefore, if punitive damages are not subject to apportionment based upon the limits of coverage for bodily injury and property damage, is the policy effectively converted to a single limit policy, as least as to the insurer's exposure for punitive damages?

This author anticipates the effects of Poole will be varied and far-reaching, particularly where, as here, there is obviously reckless conduct by a defendant and some degree of property damage, albeit minimal. Insurers can likely expect more demands for payment of combined policy limits, and threats of bad faith actions in response to any rejection of those demands. Insurers -  beware.


1 The District of South Carolina decided a similar issue in the same fashion decades ago.  See State Farm Mut. Auto Ins. Co. v. Hamilton 325 F. Supp. 931(D.S.C.1971).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions