Insurance Coverage / Bad Faith

As policyholders, we pay insurance premiums to ensure that you are protected in the event of an accident or emergency. In exchange for payment of premiums, we expect that our insurance company will be there for us and uphold its end of the bargain. Unfortunately, insurance companies do not always make the right decision and, instead, will wrongfully avoid paying claims, delay payment of claims, or attempt to settle a claim for less than its full value. If an insurance company improperly employs one of these tactics, you may have a civil claim to recover the damages incurred as a result of the insurance company’s bad faith.  Our attorneys are well versed in insurance coverage issues and in handling claims involving insurance bad faith, breach of contract, and declaratory judgment actions. If your insurance company has acted in bad faith or has otherwise failed to properly pay insurance benefits, contact us to discuss the legal options available to you.

Insurance Coverage Issues Many different types of cases can be complicated because of insurance coverage issues.  For example, many commercial general liability insurance policies and liquor liability insurance policies have exclusions for injuries arising from an intentional act or sub-limits for injuries arising from assault and battery.  Many homeowners insurance policies exclude coverage for dog bites by certain breeds of dogs.  A failure to properly navigate these exclusions or sub-limits could result in the inability to recover for a life altering injury or death.

Bad Faith In the seminal case of Tyger River Pine Co. v. Md. Cas. Co., the South Carolina Supreme Court held that “an insurer against liability for accidents which assumes the duty of defending a claim owes the assured the duty of settling the claim if that is the reasonable thing to do.” 170 S.E. 346 (S.C. 1933). The South Carolina Supreme Court has further held that in disposing of a Tyger River claim, the fact finder “is entitled to consider negligence on the issue of unreasonable refusal to pay benefits.” Nichols v. State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616 (S.C. 1983).  “The covenant of good faith and fair dealing extends not just to the payment of a legitimate claim, but also to the manner in which it is processed. Mixson, Inc. v. Am. Loyalty Ins. Co., 562 S.E.2d 659, (S.C. Ct. App. 2002). “‘If an insured can demonstrate bad faith or unreasonable action by the insurer in processing a claim under their mutually binding insurance contract, he can recover consequential damages in a tort action.’” Tadlock Painting Co. v. Md. Cas. Co., 473 S.E.2d 52, 53 (S.C. 1996).

As a result, where an insurance company receives an offer to settle a claim against its insured within the policy limits and fails to settle that claim when it could have and should have done so, such that its insured is then subjected to a verdict in excess of the policy limits and personal financial exposure, then the insured can sue the insurer in tort for bad faith claims handling.  The insured’s negligence and bad faith claim against the insurer can also be assigned, after the excess judgment, to the plaintiff in the underlying case in satisfaction of that judgment, such that the plaintiff can then stand in the insured’s shoes and recover the full judgment from the insurer without regard to the limits of coverage.  Additionally, where the insurer’s conduct was reckless or exhibited a conscious disregard of the insured’s rights, punitive damages may be recovered.

Improper Claims Practices S.C. Code § 38-59-20 sets forth the acts and omissions that constitute improper claims practices.  “Any of the following acts by an insurer doing accident and health insurance, property insurance, casualty insurance, surety insurance, marine insurance, or title insurance business, if committed without just cause and performed with such frequency as to indicate a general business practice, constitutes improper claim practices:

(1) Knowingly misrepresenting to insureds or third-party claimants pertinent facts or policy provisions relating to coverages at issue or providing deceptive or misleading information with respect to coverages.

(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies, including third-party claims arising under liability insurance policies.

(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims, including third-party liability claims, arising under its policies.

(4) Not attempting in good faith to effect prompt, fair, and equitable settlement of claims, including third-party liability claims, submitted to it in which liability has become reasonably clear.

(5) Compelling policyholders or claimants, including third-party claimants under liability policies, to institute suits to recover amounts reasonably due or payable with respect to claims arising under its policies by offering substantially less than the amounts ultimately recovered through suits brought by the claimants or through settlements with their attorneys employed as the result of the inability of the claimants to effect reasonable settlements with the insurers.

(6) Offering to settle claims, including third-party liability claims, for an amount less than the amount otherwise reasonably due or payable based upon the possibility or probability that the policyholder or claimant would be required to incur attorneys’ fees to recover the amount reasonably due or payable.

(7) Invoking or threatening to invoke policy defenses or to rescind the policy as of its inception, not in good faith and with a reasonable expectation of prevailing with respect to the policy defense or attempted rescission, but for the primary purpose of discouraging or reducing a claim, including a third-party liability claim.

(8) Any other practice which constitutes an unreasonable delay in paying or an unreasonable failure to pay or settle in full claims, including third-party liability claims, arising under coverages provided by its policies.”

S.C. Code § 38-59-40 sets forth the insurance company’s liability for attorney’s fees where it has refused to pay the claim.  “In the event of a claim, loss, or damage which is covered by a policy of insurance or a contract of a nonprofit hospital service plan or a medical service corporation and the refusal of the insurer, plan, or corporation to pay the claim within ninety days after a demand has been made by the holder of the policy or contract and a finding on suit of the contract made by the trial judge that the refusal was without reasonable cause or in bad faith, the insurer, plan, or corporation is liable to pay the holder, in addition to any sum or any amount otherwise recoverable, all reasonable attorneys’ fees for the prosecution of the case against the insurer, plan, or corporation. The amount of reasonable attorneys’ fees must be determined by the trial judge and the amount added to the judgment. The amount of the attorneys’ fees may not exceed one-third of the amount of the judgment.”

Insurance Coverage / Bad Faith Attorney It is important to retain counsel who are experienced in evaluating and litigating insurance coverage and bad faith cases to maximize the value of your case. Navigating the esoteric language of insurance policies and understanding the duties owed by insurers to insureds is an important aspect of these cases.  If your insurance company is being unreasonable in handling your claim or you are in need of personal counsel with respect to a settlement demand, please contact us to discuss the legal options available to you.