- Methamphetamine Ruled Not a Narcotic Under Insurance Policy Exclusion
- July 2, 2013 | Author: David J. Harmon
- Law Firm: Carlock, Copeland & Stair, LLP - Charleston Office
Under S.C. Code Ann. § 38-71-370(9), life insurance carriers can exclude coverage in their policies “for any loss resulting from the insured being drunk or under the influence of any narcotic unless taken on the advice of a physician.” Hutchinson v. Liberty Life Insurance Company, 2013 WL 2631374, Opinion No.27264 (June 12, 2013). The Court in Hutchinson reiterated the law governing construction of insurance contracts thusly: that words are to be given their “plain ordinary and popular meaning”, that any ambiguity is “to be construed liberally in favor of the insured”, whereas exclusionary terms are to be narrowly construed to the benefit of the insured. Id. (citing Whitlock v. Stewart Title Guar. Co., 399 S.C. 610, 732 S.E.2d 626 (2012) (internal citations omitted), and McPherson v. Michigan Mut. Ins. Co., 310 S.C. 316, 426 S.E.2d 770 (1993).
The Petitioner’s decedent was found to be under the influence of both amphetamines and methamphetamines at the time of his death from a single vehicle accident. Liberty Life sought to exclude coverage under the following language tailored under S.C. Code Ann. § 38-71-370(9), “A Benefit will not be payable under this Certificate if your Accidental Death results directly or indirectly from: (h) injury as a result of the insured being under the influence of any narcotic...” The Court of Appeals held that the language excluded coverage because methamphetamine was a narcotic based up on its “widespread illegal use.”
The Supreme Court reversed finding the Court of Appeals test for what constitutes a narcotic to be in error. The Court held that the use of the term “narcotic” rather than “unlawful drug” or “unlawful use of drug” was ambiguous because a narcotic is a defined type of controlled substance. Because methamphetamine is currently listed as a controlled substance but not a narcotic under S.C. Code Ann. §44-53-110 et seq., the Court resolved the ambiguity in favor of the insured and held that coverage existed.
Of particular import in this decision is the Court’s reference to the use of the term “narcotic” in lieu of “unlawful drug” or some similar term. Under S.C. Code Ann. § 38-71-370, no policy “may contain provisions respecting the matters set forth below unless the provisions are in the words in which they appear in this section,[or] a corresponding provision of different wording approved by the director or his designee which is not less favorable in any respect to the insured or the beneficiary.” Thus, pursuant to the Code, Liberty Life was required to use the term “narcotic” as contained in S.C. Code Ann. § 38-71-370(9) or a different wording approved by the Director of Insurance that was no less favorable to the insured. Although the Court appears to give tacit approval to the use of “unlawful drug”, it remains to be seen whether such wording would be approved and deemed no less harmful to the insured.