South Carolina Supreme Court held that an insurer providing no-fault personal injury coverage is obligated to pay, even if the insured has received benefits from another source. Cothran v. State Farm Mut. Auto Ins. Co., 831 S.E.2d. 919 (S.C. Aug. 7, 2019).

The South Carolina Supreme Court considered whether an insured was entitled to personal injury protection (PIP) coverage under her automobile insurance policy after she was injured in a car accident and received workers’ compensation benefits. The auto insurer denied PIP coverage based on a policy provision in the auto policy providing that “[a]ny [PIP] Coverage provided by this policy applies as excess over any benefits recovered under any workers’ compensation law or any other similar law.” The insured sued the auto insurer alleging breach of contract and bad faith. The trial court granted summary judgment to the insured, holding that the provision violates S.C. §38-77-144, which provides, in pertinent part, that “[i]f an insurer sells no-fault insurance coverage which provides personal protection, medical payment coverage, or economic loss coverage, the coverage shall not be assigned or subrogated and is not subject to a setoff.” The Court of Appeals reversed, holding that the setoff prohibition only applies to a tortfeasor.

Reinstating summary judgment in favor of the insured, the South Carolina Supreme Court interpreted the term “setoff,” as used in S.C. §38-77-144, to include any reduction in the amount an insurer would otherwise be obligated to pay on a claim when the right to the reduction arises as a result of a payment from a third party, and held that the setoff prohibition applied to workers’ compensation benefits.