The South Carolina legislature has an insurance claims handling bill which is very pro-policyholder and would severely limit insurance companies from denying water leaks absent prior knowledge of the policyholder. Here it is:

South Carolina General Assembly

124th Session, 2021-2022

H. 3414

Prefiled in the House on December 9, 2020

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-75-70 SO AS TO PREVENT AN INSURER FROM DENYING A CLAIM ARISING FROM A LEAK UNDER CERTAIN CIRCUMSTANCES.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Article 1, Chapter 75, Title 38 of the 1976 Code is amended by adding:

Section 38-75-70. An insurer may not deny a claim arising from a leak on the basis of the leak occurring over an extended period of time unless the insured had actual knowledge of the leak and failed to undertake actions to repair or replace the source of the leak.

SECTION 2. This act takes effect upon approval by the Governor.

More legislators, especially in Florida, should pass similar laws that protect voters and policyholders from insurance companies writing out coverage in the small print of policies. We routinely have policyholders seek our help when their hidden water damage behind walls is denied by their insurance companies. I mentioned how State Farm denies their customers for these types of claims in, Is the State Farm Policy Really Worth Anything? I noted:

What is the value of insurance if it does not pay for insured losses? Imagine if you had a significant accidental water damage to your home or business, do you know whether your insurance company has your back? Will it really be there to help you? Don’t count on it. Today, modern insurance companies are re-writing their insurance policies to limit what is covered and excluding many losses that used to be covered under all-risk policies. State Farm, as an insurance industry leader, is leading the charge of making an insurance product that no consumer should trust as providing the amount of coverage the insurance product afforded 25 years ago. It is always important to remember that Policyholders Buy Insurance for Peace of Mind and Not Economic Advantage and that concept is being defeated as carriers try to gain economic advantage by changing small print in the policy that may have significant consequences discovered by the policyholder only after disaster happens. To be Fair And Balanced with State Farm, I could have substituted Allstate, Nationwide and USAA into the title.

Bravo to South Carolina state legislator J. Todd Rutherford for standing up to the insurance lobby and filing common sense laws to help his constituents. It is an example others should follow rather than giving into the insurance company lobby and its propaganda.

Thought For The Day

Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.
—Milton Friedman