We have previously discussed Hawaii's Group Builders decision; one that has had major implications in the construction industry because of its decreed limitations on the scope of coverage afforded by a standard commercial general liability insurance policy, and holding that construction defects are not "occurrences" under same and therefore not covered by insurance.
This matter has been extensively covered by fellow blogger Tred Eyerly at his blog, insurancelawhawaii.com. For those who follow this issue, they will know that in response to the Group Builders decision, Hawaii's legislature enacted Act 83, which stated that the terms of an insurance policy must be interpreted in accordance with the resonable expectations of the parties at the time the policy was enacted. The act underwent many modifications before being finalized, but this was effectively the language finally chosen. Since then, Act 83 has been interpreted differently by different courts but has not been directly challenged as "unconstitutional" by anyone in the insurance industry.
Not so in South Carolina. In a decision released on November 21, 2012, the South Carolina Supreme Court considered and ultimately decided that legislation crafted by the South Carolina legislature to redress perceived wrongs enacted by South Carolina's version of Hawaii's Group Builders decision violated the contracts clause, but only to the extent it applied retroactively.
The act was upheld on all other constitutional challenges.
