Can my insurance company be made to pay my attorney fees in South Carolina?
Yes, under S.C. Code 38-59-40. When a covered claim goes unpaid for ninety days after you demand payment, and the trial judge finds the refusal was without reasonable cause or in bad faith, the insurer is liable for your reasonable attorney fees. The judge sets the amount and adds it to the judgment, capped at one third.
| Statute | S.C. Code Ann. 38-59-40, Title 38, Chapter 59, Claims Practices |
|---|---|
| The trigger | A covered claim refused for 90 days after a demand by the policyholder |
| The finding | Trial judge finds the refusal was without reasonable cause or in bad faith |
| The award | Reasonable fees for prosecuting the case, added to the judgment |
| The cap | No more than one third of the judgment; an affirmed appeal adds a further fee |
- • The claim has to be covered by the policy, and the insurer has to refuse to pay it for ninety days after a demand by the policyholder.
- • The trial judge, not a jury, must find that the refusal was without reasonable cause or in bad faith.
- • The award is all reasonable attorney fees for prosecuting the case, set by the trial judge and added to the judgment.
- • The fee may not exceed one third of the amount of the judgment.
- • If the defendant appeals and the judgment is affirmed, the appellate court adds a further reasonable fee for the appeal. Subsection (4) applies the section in federal court.
Four moving parts, and all four have to be there
38-59-40 is short, and every phrase in it is doing work. Read it as a checklist rather than a principle.
Element four is the contest. Reasonableness is proved out of the carrier's own claim file: the adjuster notes, the inspection or the absence of one, the estimate, and whether the stated reason survives the investigation behind it. The conduct list in S.C. Code 38-59-20 is the state's own description of what unreasonable handling looks like, which makes it the natural framework for the argument.
What the section actually says
Note what the section does not require. There is no notice to the Director of Insurance, no waiting period beyond the ninety days, and no separate cause of action to plead the fee remedy into existence. It attaches to the case you were going to bring anyway.
The demand is the start line, so date it
The ninety-day count begins with a demand by the holder of the policy. A phone call can be a demand and then become an argument about what was said; a dated letter cannot. Write the policy number, the date of loss, the amount demanded, and what supports the number, then send it so delivery is provable and keep the proof with the claim file. The sample letters are built for exactly this, and the anatomy of a denial letter shows what you are answering.
Keep the demand separate from the claim report in your own records. Those are two different dates doing two different jobs: the report starts the carrier's handling obligations under 38-59-20, and the demand starts the ninety days under this section.
One third of the judgment, plus the appeal
The trial judge determines the reasonable fee and adds it to the judgment, and the statute caps that amount at one third of the judgment. The cap ties the fee to the recovery, which is why the underlying valuation work, the estimate, the scope, and the documentation, drives the fee exposure as much as the conduct does.
Subsection (2) adds a second layer: when the defendant appeals and the judgment is affirmed, the appellate court allows the respondent an additional reasonable fee for the appeal. Subsection (4) carries the section into federal court, which matters because carriers routinely remove South Carolina property cases on diversity grounds. Subsection (3) preserves the Tyger River doctrine, a separate line of South Carolina insurance law that this section leaves untouched.
Fee shifting is not the whole case
38-59-40 pays your lawyer. It does not compensate you for what the refusal cost you. That is the work of the South Carolina common-law bad-faith action, which reaches consequential damages and, on the right facts, punitive damages. Both are usually pursued alongside the breach of contract claim for the policy benefit itself, and all three are proved out of the same file.
Florida solves the same problem differently. Fla. Stat. 624.155 creates a statutory bad-faith action that starts with a Civil Remedy Notice filed with the state and a 60-day cure window, and Fla. Stat. 626.9541(1)(i) supplies the list of unfair claim settlement practices that notice cites. South Carolina has no equivalent pre-suit filing. Here the demand letter does that job. The statute library runs both states side by side.
What an unreasonable refusal looks like on paper
The South Carolina anchor entry in the denial documents is a Helene claim: a tree through the roof of a Lake Murray home on September 26, 2024, a carrier position letter dated December 31, 2024, eight different adjusters pleaded across the year that followed, and a supplement of $21,250.07 offered on November 3, 2025. The federal complaint is public and free to read.
That file is the shape this statute was written for. The refusal is not one letter, it is a year of handling, and the fee question is whether any of it was reasonable. Read the entry: the State Farm Helene tree-through-roof claim , then run yours through the six-point test in is your denial letter legal.
One clock is running the whole time. S.C. Code 15-3-530 puts a three-year limitation on contract and policy actions, so a Helene refusal that is still open is business into late 2027 and no longer after that. Fee shifting is worth nothing on a claim that is time barred.
Questions about 38-59-40
What counts as a demand under S.C. Code 38-59-40? +
The statute says the ninety days run after a demand has been made by the holder of the policy, and it does not set out a form. The practical answer is to remove the argument: put the demand in writing, state the policy number and the date of loss, state the amount you are demanding and what supports it, and send it so delivery is provable. Then the ninety-day count has a start date the carrier cannot dispute. Confirm the wording with a South Carolina attorney.
Do the ninety days run from the date of loss? +
No. They run from the demand. A claim reported the week of the storm and demanded eight months later starts the ninety-day clock at the demand, not the storm. That is the opposite of the deadlines that run against you, which start at the loss, so the two dates need to be tracked separately.
How much can the fee award be? +
The trial judge determines the amount of reasonable attorney fees for prosecuting the case and adds it to the judgment, and the statute caps it: the amount of the attorneys fees may not exceed one third of the amount of the judgment. A separate subsection provides that if the defendant appeals and the judgment is affirmed, the appellate court allows the respondent an additional reasonable fee for the appeal.
Does the section work if my case is in federal court? +
Subsection (4) of S.C. Code 38-59-40 states that the section applies to cases filed or removed to federal court and cases appealed in the federal court system. That matters in practice because carriers frequently remove South Carolina property cases to the District of South Carolina on diversity grounds.
Is a fee award the same as winning a bad-faith case? +
No. 38-59-40 is fee shifting, not damages. It pays your lawyer out of the carrier, capped at a third of the judgment. South Carolina common-law bad faith is a separate action for the harm the unreasonable refusal caused, with consequential damages and, on the right facts, punitive exposure. They are usually pursued together with the breach of contract claim.
- S.C. Code Ann. 38-59-40 (attorney fees where the insurer has refused to pay), 38-59-20 (improper claim practices) · scstatehouse.gov ↗
- S.C. Code Ann. 15-3-530 (three-year limitation) · scstatehouse.gov ↗
- Brown v. State Farm Fire & Cas. Co., No. 3:25-cv-13575 (D.S.C., filed Nov. 25, 2025), Complaint · courtlistener.com ↗
- South Carolina Department of Insurance, Office of Consumer Services · doi.sc.gov ↗
Statute summaries drafted August 2026 and simplified for education; verify against current statute. Case allegations are the plaintiff's, taken from the cited public filing. Not legal advice; consult an attorney about your specific claim.
Ninety days is not a suggestion.
Send the demand, the dates, and the carrier's answer. You will get a straight read on whether the refusal looks unreasonable on this record, and what a South Carolina fee claim would need.
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