Title: SC INSURANCE GUARANTY ASSOC. v. Broach
Citation: 291 S.C. 349, 353 S.E.2d 450
Docket Number: 22673
State: south-carolina
Issuer: south-carolina Supreme Court
Date: February 16, 1987

291 S.C. 349 (1987) 353 S.E.2d 450 SOUTH CAROLINA INSURANCE GUARANTY ASSOCIATION, Appellant v. Andrew W. BROACH, d/b/a Andy's Aviation, Appellee. 22673 Supreme Court of South Carolina. Heard January 5, 1987. Decided February 16, 1987. George C. Kosko, Columbia, and Daphne Sipes, San Antonio, Tex., for appellant. Ronald M. Childress, Columbia, and Edward E. Saleeby and James C. Cox, Hartsville, for appellee. Heard Jan. 5, 1987. Decided Feb. 16, 1987. Per Curiam: The following question has been certified to this Court by the United States Court of Appeals for the Fourth Circuit: *350 Must an insurer, to avoid liability, show a causal connection between a loss and an exclusion in an aircraft policy, when the exclusion states: and Item 7 of the Declarations states: and Endorsement #2 states: Appellee's (Broach's) aircraft was lost at sea while being flown by a student pilot who was licensed to fly. The student pilot, however, had not obtained specific approval from his instructor prior to takeoff, within the meaning of the above exclusion, and Appellant (Insurer) denied coverage. The United States District Court entered judgment in favor of Broach, holding that Insurer had failed to show a causal connection between the exclusion and the loss. The majority rule is that an insurance exclusion is effective whether or not there is any causal connection between the excluded risk and the loss. E.g., Di Santo v. Enstrom Helicopter Corp., 489 F. Supp. 1352 (E.D.Pa.1980) (see cases cited therein). This Court, however, has expressly rejected the majority rule and embraced the "modern trend," holding that an insurance exclusion does not limit coverage unless it is causally related to the loss. South Carolina Ins. Co. v. *351 Collins, 269 S.C. 282, 237 S.E. (2d) 358 (1977); McGee v. Globe Indemnity Co., 173 S.C. 380, 175 S.E. 849 (1934). See Outlaw v. Calhoun Life Ins., Co., 238 S.C. 199, 119 S.E. (2d) 685 (1961); Young v. Life &amp; Cas. Ins. Co. of Tennessee, 204 S.C. 386, 29 S.E. (2d) 482 (1944); Smith v. Sovereign Camp, W.O.W., 204 S.C. 193, 28 S.E. (2d) 808 (1944); Bailey v. United States Fidelity and Guaranty Co., 185 S.C. 169, 193 S.E. 638 (1937); Johnson v. South State Ins. Co., 288 S.C. 239, 341 S.E. (2d) 793 (1986). This Court has applied the rule to aircraft insurance cases. South Carolina Ins. Co. v. Collins, supra. The rationale of the rule is that "when the parties made the contract of insurance, they were not inserting a mere arbitrary provision, but that it was the purpose of the insurance company to relieve itself of liability from accidents caused by the excluded provision." South Carolina Ins. Co. v. Collins, 269 S.C. at 291, 237 S.E. (2d) at 361-362. Accordingly, we hold that an insurer must show a causal connection between a loss and an exclusion before the exclusion will limit coverage under the policy.