This blog follows on the previous post, Insurance Bad Faith South Carolina: Part 3.

South Carolina allows “Bad Faith” lawsuits involving first party insurance claims. “Bad faith” claims handling is really a misnomer. Lawsuits involving insurance companies paying late and not enough money should be called Lack Of Good Faith lawsuits. “Bad faith” only heightens the standard and seems to imply an immoral or fraudulent standard:

In law, there are inconsistent definitions of bad faith, with one definition much more broad than used in other fields of study discussed in the above sections. Black’s Law Dictionary equates fraud with bad faith. But one goes to jail for fraud, and not necessarily for bad faith. The Duhaime online law dictionary similarly defines bad faith broadly as ‘intent to deceive’, and ‘a person who intentionally tries to deceive or mislead another in order to gain some advantage’.1

Insurance claims adjusters that fail to fully and promptly investigate claims, fail to pay undisputed amounts of loss timely, and deny claims without clear evidence supporting denials act unreasonably and breach obligations of good faith. These good faith duties and the failure to conform adjustments to those standards are what claims practice lawsuits are about. The legal phrase for these cases as “bad faith” lawsuits has always bothered me as I studied what adjusters are taught to do to comply with Good Faith standards.

South Carolina bad faith cases need to be brought within three years. Two unpublished decisions involving the same case demonstrate three years is the time frame and that the timing of the breach of contract or the breach of the duties should be plead in the pleadings of the lawsuit:

South Carolina Code § 15-5-530(8) expressly applies a three-year statute of limitations to ‘an action on any policy of insurance, either fire or life.’ Lowcountry also argues ‘either fire or life’ exempts insurance other than fire or life insurance from that subsection, and that, consequently, the three-year statute of limitations for any action on a contract (§ 15-5-530(1)) applies. Because, according to Lowcountry, the § 15-5-530(1) limitations period runs from the date of breach, not the date of loss, the complaint is timely because the breach purportedly occurred in January 2017….That argument is without merit because the complaint does not provide any allegations from which a date of an alleged breach, other than the September 23, 2013 date of loss, could be inferred.

The very able South Carolina insurance defense attorney Andrew Watson successfully argued in his brief:

Relative to its ‘Bad Faith’ Cause of Action, Plaintiff alleges that Cincinnati ‘acted negligently and in bad faith in failing … to pay’ benefits due under the Policy….The only action which Plaintiff’s Complaint identifies in support is the preceding paragraph, wherein Plaintiff alleges that although ‘Plaintiff spent numerous hours providing information’ to Cincinnati, Plaintiff has not received ‘any payment’, but only a ‘request [from Cincinnati] for additional documentation.’ …Even if this were true, which it is not, a mere ‘request for additional documentation’ is not evidence of ‘bad faith’. Conspicuously absent are any allegations showing how the documents and information Plaintiff provided were sufficient to substantiate its Bad Faith claim or how Cincinnati’s request for ‘additional documentation’ was unreasonable…Accordingly, Plaintiff’s Bad Faith Cause of Action fails to state a plausible claim for relief, and it should be dismissed.

This same deficiency pervades Plaintiff’s ‘Breach of Contract’ Cause of Action. There, Plaintiff concludes that Cincinnati ‘failed to comply with the terms of the policy’, has ‘refuse[d] … to pay policy benefits’, and that as a result, ‘Plaintiff has suffered damage’….Notably absent are any allegations identifying the property being claimed; the amounts being claimed; the policy provisions that cover Plaintiff’s claim; or otherwise how Cincinnati breached the Policy.

When in South Carolina, policyholders need to think of the three-year statute of limitations when it comes to “bad faith” lawsuits. Further, be certain to explain how the good faith duties were breached in order to prove that the insurance company acted in an “unreasonable” manner. This standard certainly does mean proving that the insurance company adjuster is a bad person.

Thought For The Day

I grew up in Beaufort, South Carolina, in a six-room farmhouse with a couple of leaning posts to keep it from fallin’. I came up in a time when men were men.
—Joe Frazier