Claims Handling Practices - South Carolina
September 3, 2019
Claims Adjusting Standards
“[I]f committed without just cause and performed with such frequency as to indicate a general business practice,” any of the following acts by an insurer constitutes an improper claim practices under South Carolina law (S.C. Code Ann. § 38-59-20(1)-(8)):
- 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. S.C. Code Ann. § 38-59-20(1).
- 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. S.C. Code Ann. § 38-59-20(2).
- Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims, including third-party liability claims, arising under its policies. S.C. Code Ann. § 38-59-20(3).
- 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. S.C. Code Ann. § 38-59-20(4).
- 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. S.C. Code Ann. § 38-59-20(5).
- 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. S.C. Code Ann. § 38-59-20(6).
- 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 forthe primary purpose of discouraging or reducing a claim, including a third- party liability claim.” S.C. Code Ann. § 38-59-20(7).
- “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 Ann. § 38-59-20. S.C. Code Ann. § 38-59-20(8).
Section 38-59-20 does not create a private right of action. See S.C. Code Ann. § 38-59-20.
“When an insurer under an insurance policy requires a written proof of loss after the notice of the loss has been given by the insured or beneficiary, the insurer or its representative shall furnish a blank to be used for that purpose.” S.C. Code Ann. § 38-59-10. “If the forms are not furnished within twenty days after the receipt of the notice, the claimant is considered to have complied with the requirements of the policy as to proof of loss upon submitting within the time fixed in the policy for filing proofs of loss written proof covering the occurrence, character, and extent of the loss for which claim is made.” Id.
Hurricane Claims Standards
The South Carolina Department of Insurance issues hurricane preparedness guidelines on the Department’s website: https://www.doi.sc.gov/847/Hurricane-Preparedness
Director of Insurance Raymond G. Farmer issued Bulletin 2019-07 on September 3, 2019, allowing non-resident adjusters and motor vehicle physical damage appraisers to assist with the evaluation of claims for 120 days under S.C. Code Ann. § 69-1. The full text of Bulletin 2019-07 is available here: https://doi.sc.gov/DocumentCenter/View/12150/Bulletin-2019-07_Hurricane-Dorian-Emergency-Adjusters-and-Appraisers
Duty of Good Faith
Violations of § 38-59-20 do not create a private right of action. But South Carolina does recognize a statutory cause of action for refusal to pay a claim within ninety days “without reasonable cause or in bad faith.” S.C. Code Ann. § 38-59-40(a). Under § 38-59-40(a). The insurer will also be is liable for all reasonable attorneys’ fees.
South Carolina recognizes an independent common law cause of action for bad faith against a first-party insurer. Cock-N-Bull Steak House v. Generali Ins. Co., 466 S.E.2d 727, 730 (S.C. 1996) “An insured may recover damages for a bad faith denial of coverage if he or she proves there was no reasonable basis to support the insurer’s decision to deny benefits under a mutually binding insurance contract.” Id. Punitive damages also are available if “the insurer’s actions were willful or in reckless disregard of the insured’s rights.” Nichols v. State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616, 619 (S.C. 1983).
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