What Is Bad Faith Insurance in South Carolina?
Bad faith insurance means an insurance company doesn’t have a reasonable basis for denying a claim or refusing to pay benefits owed under a policy. In South Carolina, bad faith can give a policyholder the right to pursue a separate claim against the insurer.
At Wyndham Law Firm, LLC, we’ve helped clients throughout Charleston and South Carolina handle insurance disputes for more than 30 years. If you’re questioning whether an insurance company handled your claim fairly, understanding how South Carolina law defines bad faith is a good place to start. This article explains when an insurer’s conduct may cross the line and what rights policyholders may have.
What Actions May Constitute Insurance Bad Faith?
South Carolina treats bad faith differently from a typical dispute over insurance coverage. Instead of focusing only on whether benefits were owed under the policy, the law also looks at how the insurance company handled the claim. In some situations, an insurer’s conduct can create a separate tort claim beyond the underlying coverage dispute.
Certain actions may suggest the insurer failed to meet its obligations during the claims process, including:
- Unreasonable delays in processing a claim
- Failing to conduct a proper investigation
- Ignoring communications from the policyholder
- Misrepresenting policy language or coverage terms
- Refusing to settle a claim after liability becomes reasonably clear
- Offering far less than the claim is worth without adequate justification
Many of these actions are addressed in the state’s improper claim practices statute, which establishes standards for claim handling. Even so, a denied claim doesn’t automatically mean bad faith occurred. Insurance companies can dispute claims when a legitimate question about coverage exists. The issue is whether the insurer had a reasonable basis for its actions.
When Can an Insurance Company Deny a Claim Without Acting in Bad Faith?
An insurer can deny a claim if it has a reasonable basis for doing so, even when the policyholder believes the decision is wrong. Common reasons for legitimate claim disputes include:
- A policy exclusion may apply to the loss
- The insurer and policyholder may interpret the policy differently
- There may be questions about what caused the damage
- The parties may disagree about the value of the claim
What Compensation May Be Available in a South Carolina Bad Faith Claim?
A successful bad faith claim may allow a policyholder to recover more than the amount originally owed under the insurance policy. Compensation can include financial losses caused by the insurer’s conduct. Attorney’s fees may also be available, and punitive damages can be awarded when an insurer acts with willful or reckless disregard for a policyholder’s rights.
Protect Your Rights During an Insurance Dispute
Insurance companies have the right to investigate claims and determine whether coverage applies. At the same time, they must handle claims fairly and have a reasonable basis for the decisions they make. When a claim is delayed without explanation or denied without adequate support, it may be worth taking a closer look at how the insurer handled the matter.
At Wyndham Law Firm, LLC, we represent policyholders in Charleston. If you have questions about a denied claim or believe an insurance company acted in bad faith, contact us or call 843-279-5312 to discuss your situation.