When you contract with an insurance company, they have an obligation to pay reasonable claims. That means if they refuse to pay when Under current South Carolina law, an insurance company that fails to live up to that obligation, you may have a separate claim for breach of contract. In that case, the insurance company can be responsible for damages beyond the direct losses associated with the accident–even beyond the limits of the insurance policy.
That’s important because insurance companies don’t always play fair. Some examples of bad faith actions by insurance companies include:
- Unreasonable delays intended to pressure the injured person to give up or to settle for less than the claim is worth
- Misrepresentations about what is and is not covered under the policy
- Denying a claim without cause
All of these tactics are weapons insurance companies use to avoid paying fair compensation to people who have paid their insurance premiums for years to ensure that they are protected if something goes wrong. The insurance companies collected those premiums and built up their profits, but they don’t want to live up to their end of the deal.
Current law gives insured people a way to fight back. The possibility of a bad faith insurance claim means it can be more expensive for an insurance company to try to avoid payment that would be to offer and pay a fair settlement. So, they have an incentive to live up to their contract.
How Tort Reform Would Change Bad Faith Insurance Law
SB 244 would give insurance companies a way to delay payment in bad faith and avoid consequences. Under the proposed law, an insurance company could lie, delay in bad faith, even intentionally wrongfully deny a claim and then get a free pass if they “fixed” the problem by paying policy limits within a specified time. In some situations, this free pass would allow insurance companies to string policyholders along, mislead them and otherwise act in bad faith for up to TEN MONTHS after a lawsuit was filed. That could be a year or two or even more after the incident occurred.
In simple terms, the new law calls “no harm no foul” if the insurance carrier pays the policy limits after several months (or more) of bad faith actions that harm the policyholder. During that time, the policyholder could have difficulty getting the medical care they need, lose their job because they can’t replace their totaled vehicle until the claim is settled, and face a cascade of financial and other problems as a result.
Obviously, the insurance company finally paying what they owed all along after their insured has suffered significant additional losses due to their bad behavior doesn’t make things right. But, SB 244 would say “too bad!” to those harmed by bad faith actions.
Meanwhile, insurance companies would know that they could afford to use those bad faith tactics against you for months without any risk to them. When their customers gave up and accepted far less than they owed because they couldn’t handle the delays or believed the lies, the insurance company would boost their profits by hurting the insured. When the insured continued to fight, the insurance company could simply wait until the last possible minute and offer what they’d always known was owed.
Bad Faith Insurance Law Matters
Gutting bad faith insurance law leaves people who have been injured or lost critical property like their homes and cars at risk. And, limiting bad faith insurance claims in cases where the insurance company clearly acted in bad faith tells insurance companies it’s okay to lie, delay, and pressure their own customers to avoid fair payment under their policies.
Tell your legislators you don’t want them to protect insurance companies from the consequence of their own bad actions at the expense of your neighbors…or you. Learn more at https://fairsc.com