South Carolina gives policyholders a bad-faith remedy and, in some cases, attorney fees when an insurer refuses to pay without a reasonable basis. Here's the plain-English version.
South Carolina policyholders have two overlapping protections when an insurer mishandles a claim: a statutory improper-claim-practices framework and a common-law bad-faith cause of action. Both aim at the same problem — a carrier that refuses to pay a valid claim without a good reason.
The statute: Title 38, Chapter 59
South Carolina’s improper-claim-practices provisions live in S.C. Code Title 38, Chapter 59. Section § 38-59-20 describes practices considered improper — including refusing to pay claims without conducting a reasonable investigation, or failing to attempt a good-faith, prompt, and equitable settlement when liability is reasonably clear.
The piece policyholders care about most is the fee-shifting provision at § 38-59-40. In general terms, when an insurer refuses to pay a claim within a defined period and that refusal is found to be without reasonable cause or in bad faith, the statute allows a court to award reasonable attorney fees on top of the amount due — subject to the statute’s caps and conditions. Read the section for the exact limits, because they matter.
The common-law claim
Separately, South Carolina recognizes a common-law bad-faith claim: when an insurer refuses to pay benefits under a policy without a reasonable basis, the insured may recover consequential damages, and in some cases punitive damages, beyond the policy amount. The statutory and common-law paths can apply to the same facts but have different elements and remedies.
What “bad faith” is not
Bad faith is not simply losing a coverage dispute. An insurer is allowed to disagree and to investigate. The line is reasonableness: a genuine, documented dispute over coverage is different from a refusal with no reasonable basis. That distinction is fact-specific and is why these cases turn on the claim file.
Practical takeaways
- Keep a paper trail. What the carrier asked for, what you sent, and how it responded is the evidence a bad-faith analysis turns on.
- Fees can change the math. Because § 38-59-40 can shift fees in the right case, a claim that seems too small to fight may look different — the opposite of Florida, which repealed its one-way fee statute.
- Coverage first, conduct second. Bad faith usually rides on top of a coverage dispute — start by nailing down your coverage and the loss, then the claims options.
A licensed public adjuster (regulated under South Carolina’s Title 38 provisions) can help measure the loss — see the public-adjuster directory — and our tools help you track deadlines.
This is general information about South Carolina law, not legal advice. The statute’s caps, deadlines, and conditions control, and they are fact-specific — confirm the current statute and how it applies with a licensed South Carolina attorney.
General information, not legal advice — laws and policies vary and change. Confirm current statutes and your own dates with a licensed attorney before acting.