Best Small Business Insurance in South Carolina

South Carolina Insurance Requirements

The state of South Carolina requires workers' compensation insurance for any business that employs four or more full-time or part-time employees. 

Commercial auto insurance is also required by law in the state of South Carolina for any business that owns or operates any motor vehicles within the state.

Data breach notification regulations in South Carolina also mandate that affected parties, including customers and workers, be notified in the event their data has been compromised. Although data breach insurance or cyber liability insurance is not required by law, it is highly recommended because of the significant costs and detrimental effects should your business suffer a data breach or cyber attack.

Workers’ Compensation Insurance

Workers’ compensation has been a requirement in South Carolina since 1911 and is governed under the South Carolina Code of Laws. Statute requires that employers operating in South Carolina accept the provisions of the law and pay compensation for personal injury or death on the job.

§ 42-1-310: Presumption of acceptance of provisions of title

Every employer and employee, except as stated in this chapter, shall be presumed to have accepted the provisions of this title respectively to pay and accept compensation for personal injury or death by accident arising out of and in the course of the employment and shall be bound thereby.

South Carolina’s Workers’ Compensation Law goes on to define employer’s requirements for workers’ compensation insurance and the proof of financial ability that employers are required to provide.

§ 42-5-10: Employer shall secure payment of compensation; extent of liability

Every employer who accepts the compensation provisions of this title shall secure the payment of compensation to his employees in the manner provided in this chapter. While such security remains in force he or those conducting his business shall only be liable to any employee who elects to come under this title for personal injury or death by accident to the extent and in the manner specified in this title.

§ 42-5-20: Insurance or proof of financial ability to pay required; self-insurer prohibited

(A)(1) Every employer who accepts the provisions of this title relative to the payment of compensation shall insure and keep insured his liability thereunder in any authorized corporation, association, organization, or mutual insurance association formed by a group of employers so authorized or shall furnish to the commission satisfactory proof of his financial ability to pay directly the compensation in the amount and manner and when due as provided for in this title. The commission may, under such rules and regulations as it may prescribe, permit two or more employers in businesses of a similar nature to enter into agreements to pool their liabilities under the Workers' Compensation Law for the purpose of qualifying as self-insurers. In the case of self-insurers the commission shall require the deposit of an acceptable security, indemnity, or bond to secure the payment of the compensation liabilities as they are incurred. The Workers' Compensation Commission shall have exclusive jurisdiction of group self-insurers under this section, and such group self-insurers shall not be deemed to be insurance companies and shall not be regulated by the Department of Insurance. Provided, further, that if any provision is made for the recognition of reinsurance of the self-insured fund, such provision shall expressly provide that the reinsurance agreement or treaty must recognize the right of the claimant to recover directly from the reinsurer and that such agreement shall provide for privity between the reinsurer and the workers' compensation claimant.

(2) In lieu of submitting audited financial statements when an employer makes an application to self-insure with the commission, the commission shall accept the sworn statement or affidavit of an independent auditor verifying the financial condition of the employer according to the required financial ratios and guidelines established by regulation of the commission. The independent auditor must be a certified public accountant using generally acceptable accounting principles in the preparation of the financial statements of the employer.

(B) A corporation, association, organization, or mutual insurance association formed pursuant to Section 42-5-50 may not be considered a licensed insurer pursuant to Chapter 31, Title 38 and may not participate in or receive benefits or protection from the South Carolina Property and Casualty Insurance Guaranty Association.

(C) An assumption, transfer, merger, or other acquisition of a block of business by a licensed insurer from a self-insurer may not be approved until the commission has obtained an opinion from a qualified actuary as to the adequacy of assets and other funding to adjudicate and pay any known claims as of the effective date of the assumption, transfer, merger, or other acquisition of the self-insured block.

South Carolina law also details the fines and penalties for failure to comply with the Workers’ Compensation Act:

67-1401: Fines, Assessment and Review

A. The Commission is authorized to assess fines as provided in this Chapter and the Act. The following provisions shall apply to the assessment and request for review of a fine against a party or its representative.

B. The department or division of the Commission charged with assessing the fine shall provide written notice of a failure to file a form and an assessment.

(1) Within thirty days of the date of service of the notice, the form must be filed and the assessment paid to the Commission. A request for a director's review of the assessment may be filed according to C below.

(2) Failure to file the form and make prompt payment of an assessed fine or to request review of the assessment as provided in

C. below shall result in an order issued. Review of an assessment and possible abatement of a fine may be requested as follows:

(1) Set forth in writing the reasons for contesting the assessment.

(2) File the request with the Department or Division that issued the assessment as indicated on the notice within thirty days of service of the notice.

(3) The department or division director will review the request and may abate the fine if good cause is shown.

(4) The director will provide written notice to the party requesting review and set forth the reasons for the director's determination.

(5) If the director affirms the assessment, a hearing may be requested and shall be granted if timely filed according to E below.

Commercial Auto Insurance

The State of South Carolina also requires any vehicles registered or operated in South Carolina to be covered by commercial auto insurance. According to the South Carolina’s Motor Vehicle Financial Responsibility Act, it is against the law to drive a car without insurance or other proof of financial responsibility. It is also against the law for a car owner to permit a driver to use their vehicle without proof of financial responsibility.

South Carolina state statutes discusses the financial responsibility of owning and driving an automobile in South Carolina. They also talk about the penalties for not meeting the financial responsibility requirements.

§ 56-10-10: Security required on registered vehicles

Every owner of a motor vehicle required to be registered in this State shall maintain the security required by Section 56-10-20 with respect to each motor vehicle owned by him throughout the period the registration is in effect. No certificate of registration may be issued or transferred to an owner by the director of the Department of Motor Vehicles unless the owner or prospective owner produces satisfactory evidence that the security is in effect, including the name of the owner's automobile liability insurer, and his signed statement, subject to this state's perjury statutes, that insurance is in place as required by this section.

§ 56-10-20: Type of security required

The security required under this chapter is a policy or policies written by insurers authorized to write such policies in South Carolina providing for at least (1) the minimum coverages specified in Sections 38-77-140 through 38-77-230 and (2) the benefits required under Sections 38-77-240, 38-77-250, and 38-77-260. However, the director or his designee may approve and accept another form of security in lieu of such a liability insurance policy if he finds that such other form of security is adequate to provide and does in fact provide the benefits required by this chapter.

South Carolina State Code defines minimum coverage limits for automobile insurance in the state at $25,000 per person, $50,000 per accident, and $25,000 in property damage coverage:

§ 38-77-140: Bodily injury and property damage limits; general requirements

(A) An automobile insurance policy may not be issued or delivered in this State to the owner of a motor vehicle or may not be issued or delivered by an insurer licensed in this State upon a motor vehicle then principally garaged or principally used in this State, unless it contains a provision insuring the persons defined as insured against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States or Canada, subject to limits exclusive of interest and costs, with respect to each motor vehicle, as follows:

(1) twenty-five thousand dollars because of bodily injury to one person in any one accident and, subject to the limit for one person;

(2) fifty thousand dollars because of bodily injury to two or more persons in any one accident; and

(3) twenty-five thousand dollars because of injury to or destruction of property of others in any one accident.

(B) Nothing in this article prevents an insurer from issuing, selling, or delivering a policy providing liability coverage in excess of these requirements.

South Carolina allows several ways of proving financial responsibility:

§ 56-9-540: Methods of proving financial responsibility

Proof of financial responsibility when required under this chapter may be given by filing:
(1) A certificate of insurance as provided in Section 56-9-550 or Section 56-9-560;
(2) A bond as provided in Section 56-9-570; or
(3) A certificate of deposit of money or securities as provided in Section 56-9-580.

South Carolina Code also lays out penalties for not carrying auto insurance, including the confiscation of registration and license plates, loss of driving privileges, and criminal penalties:

§ 56-10-45: Confiscation of registration certificates and license plates

(A) The Department of Public Safety and the Department of Motor Vehicles each may enter into agreements with other municipal and county law enforcement agencies for the collection of suspended or revoked drivers' licenses, motor vehicle registrations, and motor vehicle plates. The contracting department must assess a fifty dollar fine for each item recovered pursuant to this section in addition to any other fines assessed. Upon collection, this fine must be returned on a quarterly basis to the general fund of the municipality or county which initiated the enforcement action.

(B) All motor vehicle registration certificates, motor vehicle plates, and drivers' licenses confiscated or seized pursuant to this section must be returned to the Department of Motor Vehicles within fifteen days.

(C) The Department of Motor Vehicles shall collect and keep the reinstatement fee as provided in Section 56-10-240 and the per diem fine as provided in Section 56-10-245 upon the reinstatement of tags confiscated by local law enforcement agencies pursuant to this section. Fines collected pursuant to Section 56-10-240, referring to the monetary penalty of a person who is guilty of a misdemeanor for wilful failure to return his motor vehicle license plates and registration, must be paid to the governing body of the local law enforcement agency confiscating the tags and deposited in the general fund of the local governing body. The director or his designee shall monthly provide information to local law enforcement agencies, upon request of the local law enforcement agency, on uninsured vehicles.

§ 56-10-225: Proof of insurance and financial responsibility in vehicle; penalties

(A) A person whose application for registration and licensing of a motor vehicle has been approved by the Department of Motor Vehicles must maintain in the motor vehicle at all times proof that the motor vehicle is an insured vehicle in conformity with the laws of this State and Section 56-10-510.

(B) The owner of a motor vehicle must maintain proof of financial responsibility in the motor vehicle at all times, and it must be displayed upon demand of a police officer or any other person duly authorized by law. Evidence of financial responsibility may be provided by use of a mobile electronic device in a format issued by an automobile insurer. This section does not require that an automobile insurer issue verification concerning the existence of coverage it provides an insured in an electronic format. Information contained or stored in a mobile electronic device presented pursuant to this subsection is not subject to a search by a law enforcement officer except pursuant to the provisions of Section 17-13-140 providing for the issuance, execution, and return of a search warrant or pursuant to the express written consent of the lawful owner of the device.

(C) A person who fails to maintain the proof of insurance in his motor vehicle as required by subsection (A) is guilty of a misdemeanor and, upon conviction, is subject to the same punishment as provided by law for failure of the person driving or in control of a motor vehicle to carry the vehicle registration card and to display the registration card upon demand. However, a charge of failing to maintain proof that a motor vehicle is insured must be dismissed if the person provides proof to the court that the motor vehicle was insured on the date of the violation. Upon notice of conviction, the department shall suspend the owner's driver's license until satisfactory proof of insurance is provided. If at any time the department determines that the vehicle was without insurance coverage, the owner's registration and driving privileges will be suspended pursuant to Section 56-10-520.

§ 56-17-10: Willful failure to purchase license, keep records, or supply information in violation of law; willful falsification of information

A person required by a provision of law or by regulation to purchase a license, keep any records, or supply any information, who wilfully fails to purchase a license, keep the records, or supply the information or who wilfully falsifies information so supplied, at the time or times required by law or regulation, in addition to other penalties provided by law, is guilty of a misdemeanor and, upon conviction, must be fined not more than ten thousand dollars or imprisoned not more than one year, or both, including the cost of prosecution.

Data Breach Insurance

Companies in the state of South Carolina that handle the personal identifying information (PII) and personal health information (PHI) of their customers or employees are required by law to let those people know when their personal information is compromised due to a security breach.

Businesses that conduct business in South Carolina or store personal information of South Carolinians are required by the South Carolina Code of Laws to notify affected customers or workers if their data has been breached. 

§ 39-1-90: Business data, breach of security; notifications, definitions, penalties, and exceptions

(A) A person conducting business in this State, and owning or licensing computerized data or other data that includes personal identifying information, shall disclose a breach of the security of the system following discovery or notification of the breach in the security of the data to a resident of this State whose personal identifying information that was not rendered unusable through encryption, redaction, or other methods was, or is reasonably believed to have been, acquired by an unauthorized person when the illegal use of the information has occurred or is reasonably likely to occur or use of the information creates a material risk of harm to the resident. The disclosure must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as provided in subsection (C), or with measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

(B) A person conducting business in this State and maintaining computerized data or other data that includes personal identifying information that the person does not own shall notify the owner or licensee of the information of a breach of the security of the data immediately following discovery, if the personal identifying information was, or is reasonably believed to have been, acquired by an unauthorized person.

(C) The notification required by this section may be delayed if a law enforcement agency determines that the notification impedes a criminal investigation. The notification required by this section must be made after the law enforcement agency determines that it no longer compromises the investigation.

(D) For purposes of this section:

(1) "Breach of the security of the system" means unauthorized access to and acquisition of computerized data that was not rendered unusable through encryption, redaction, or other methods that compromises the security, confidentiality, or integrity of personal identifying information maintained by the person, when illegal use of the information has occurred or is reasonably likely to occur or use of the information creates a material risk of harm to a resident. Good faith acquisition of personal identifying information by an employee or agent of the person for the purposes of its business is not a breach of the security of the system if the personal identifying information is not used or subject to further unauthorized disclosure.

Even while South Carolina does not mandate businesses to have data breach or cyber liability insurance, the expense of complying with the law in the event that your company suffers a cyber assault can be significant.

South Carolina Insurance Resources

South Carolina Department of Insurance
South Carolina Department of Transportation
South Carolina Workers’ Compensation Commission
South Carolina Department of Insurance Information for Small Businesses
South Carolina Workers’ Compensation Commission Employer FAQs
South Carolina Department of Insurance Automobile Insurance

General Liability Insurance

The vast majority of South Carolina companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

South Carolina requires all businesses with four or more employees to carry workers’ compensation insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate South Carolina insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.