We represent insurance companies and insured businesses in coverage disputes throughout South Carolina. From bad faith to breach of contract, these disputes often involve a variety of complex issues, and we have decades of experience helping our clients navigate the unique aspects of insurance coverage litigation and ADR.
Our attorneys are experienced and aggressive advocates for companies involved in insurance coverage disputes arising out of claims for property damage, construction defects, business interruptions, work-related injuries, and other types of losses. Representing both insurance companies and insured businesses, we have decades of experience on both sides of insurance coverage disputes and are closely familiar with the complex legal issues involved.
Insurance contracts are complicated, often densely-worded agreements that are designed to foresee the various potential circumstances in which a claim for coverage may arise. A claim is either covered or it isn’t; and ideally, determining whether an insurer is required to pay will be a simple matter of reading the plain language of the insured’s policy. Unfortunately, in practice, insurance claims are rarely so straightforward. Determining whether a policyholder is entitled to coverage often requires a detailed factual investigation and careful analysis of the pertinent endorsements and policy language.
We provide representation for informal resolution of coverage disputes, state and federal court litigation, and alternative dispute resolution (ADR) proceedings throughout South Carolina. When you contact us, we will thoroughly assess your company’s legal rights and help you choose a course of action that protects your company’s interests as efficiently and cost-effectively as possible. Whether that means initiating mediation or arbitration or seeking a declaratory judgment in court. We will work closely with you throughout the process so that you can make informed decisions every step of the way.
Common Issues in Insurance Coverage Disputes
While insurance coverage disputes tend to be highly fact-specific, they often involve similar types of legal claims and issues. We routinely represent and advise clients with regard to insurance coverage disputes in the following areas.
Under South Carolina law, insurance companies have an obligation to investigate and evaluate policyholders’ coverage claims in good faith. Denials often trigger accusations of bad faith, with specific allegations running the gamut from misrepresenting policyholders’ rights to lacking a reasonable basis for denial of coverage. Whether a delay or denial crosses the line into bad faith is itself a fact-intensive inquiry, as the circumstances involved in investigating and evaluating a claim are often not as straightforward as they may initially seem.
Breach of Contract
Improperly denying an insurance claim is a breach of contract, and coverage disputes routinely center around the specific endorsements and provisions included in the insured’s policy. At Howser, Newman & Besley, LLC, we have extensive experience in breach-of-contract litigation involving insurance coverage and other issues. We can assess your company’s rights under the terms of your policy (including any rights to compel mediation or arbitration), and we can pursue a case strategy focused on quickly securing a favorable resolution.
Declaratory Judgment Actions
In many instances, going to court to seek a declaratory judgment will be the most efficient way to resolve an insurance coverage dispute. This is true for both insurance companies and policyholders. However, seeking a declaratory judgment can potentially have undesirable consequences (particularly if the attempt to obtain a declaratory judgment is unsuccessful and results in further conflicts between the insurance company and the insured). Therefore, the decision to file for a declaratory judgment requires a careful assessment of the merits of the coverage claim and the likelihood of success in court.
Examinations Under Oath
An EUO is a formal proceeding during which the insured (or a representative of the insured) answers questions from the insurance company under oath. Insurance policies will often require insureds to submit to EUOs upon request once a claim has been filed. Similar to motions for declaratory judgment, examinations under oath (EUOs) can have benefits for both insurers and insureds under differing circumstances. We can help you understand your rights and obligations regarding examinations under oath, and we can represent you in any EUO proceedings arising out of our claim.
Negligence-based claims are common in insurance coverage litigation as well. These claims can arise out of a variety of circumstances, from misrepresentations of coverage to errors during the investigative process. If your insurance coverage dispute involves a claim for negligence, we can assess all potential grounds for recovery and use the available evidence to protect your company’s financial interests.
Answers to FAQs: Insurance Coverage Litigation and ADR
Q: What are some examples of bad-faith insurance practices?
While there are a variety of practices that can create liability for bad faith, in many circumstances, there will be a valid justification for what appears to be an improper denial or delay in providing coverage. For example, some of the more-common allegations in bad-faith insurance disputes include:
- Attempting to settle for significantly less than the value of the claim
- Denying or delaying payment without a reasonable basis for doing so
- Failing to conduct a timely investigation
- Failing to conduct an unbiased investigation
- Inappropriately threatening legal action against a policyholder
- Misrepresenting the terms of coverage or policyholders’ rights under South Carolina law
- Not issuing a final determination regarding coverage within a reasonable period of time
- Refusing to acknowledge verified facts when evaluating a claim or settlement
Whether action (or inaction) is indicative of bad-faith insurance practices requires a thorough understanding of the unique circumstances involved in the policyholder’s claim and the insurance company’s investigation.
Q: What are some reasons why an insurance company can validly deny an insured’s claim for coverage?
The most obvious reason why an insurance company would be within its rights to deny coverage is because the claim is not covered under the terms of the insured’s policy. Even the most comprehensive insurance policies do not cover all losses – and in complicated cases it is not unusual for insurers and insureds to disagree over what is covered and what is not. Other potential reasons why an insurer may be able to deny coverage include:
- Failure of the insured to comply with the terms of coverage (e.g., by failing to provide timely notice of a claim)
- Fraud (e.g., causing a loss in order to collect insurance proceeds)
- Misrepresentation or concealment of material facts (e.g., claiming that pre-existing damage is the result of a covered peril)
Q: Can insurers compel mediation or arbitration to resolve insurance coverage disputes?
Mandatory mediation and arbitration provisions in insurance contracts are generally enforceable under South Carolina law. In addition, certain types of claims (such as workers’ compensation claims) are subject to mandatory mediation under state law. Mediation and arbitration can provide cost-effective alternatives to traditional litigation under a broad range of circumstances, and they are preferred methods of dispute resolution for many types of claims.
Determining whether your particular claim dispute is subject to mediation or arbitration requires a review of the terms of your policy and an understanding of the particular facts and circumstances involved. If it appears unlikely that your dispute can be resolved informally, one of our first steps will be to determine if you are subject to (or have the right to compel) mandatory ADR.
Q: What is subrogation? How is it different from indemnification?
Subrogation involves an insurance company seeking reimbursement for payment on a covered claim. For example, if a defective piece of equipment or machinery causes fire damage to a business, the business owner’s insurer may be required to pay the business’s property insurance claim. However, the insurer can then seek subrogation from the equipment manufacturer, whose defective equipment was actually the cause of the damage in the first place.
When a company is entitled to indemnification, this generally means that another company is required to defend against (and/or provide coverage for) a claim directly. For example, if a vehicle leasing company has an indemnification agreement with an automotive manufacturer, and a lessee files a defect claim against the lessor, the manufacturer would be directly liable to the lessee (and would generally have the right to present its own defense).
These are complicated issues that can have significant implications for businesses and their insurers. With our broad experience in insurance coverage litigation, we have the knowledge required to help our clients successfully navigate these types of challenges.
Schedule an Initial Consultation at Howser, Newman & Besley, LLC
If you need pre-litigation guidance or experienced legal representation for an insurance coverage dispute in South Carolina, we encourage you to get in touch. With our team approach to counseling, litigation, and ADR, we bring decades of experience to every matter we handle. We offer straightforward solutions that focus on producing favorable results as cost-effectively as possible. To get started with a confidential initial consultation, please call our Columbia office at (866) 207-6209 or our Charleston office at (877) 216-6970 today. You can also email one of our attorneys directly.