H 4733

South Carolina General Assembly
126th Session, 2025-2026
Bill 4733
Indicates Matter Stricken
Indicates New Matter
(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
A bill
TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE
"BAD FAITH PRESUMPTION IN INSURANCE SETTLEMENT OFFER ACT" BY ADDING SECTION
38-59-60 SO AS TO PROVIDE A REBUTTABLE PRESUMPTION OF BAD FAITH BY AN INSURER
IN CERTAIN CIRCUMSTANCES INVOLVING INSURANCE SETTLEMENT AGREEMENTS, TO DEFINE
NECESSARY TERMS, TO PROVIDE THE PRESUMPTION IS REBUTTABLE, AND TO PROVIDE THE
ADMISSIBILITY OF SETTLEMENT AGREEMENTS IN SUBSEQUENT BAD FAITH ACTIONS, AMONG
OTHER THINGS.
Whereas, the South
Carolina General Assembly finds that insureds, claimants and defendants often
reach a mutual agreement to settle a claim within the available liability
coverage limits of an insurance policy; and
Whereas, when the
insurance company or its adjuster refuses to settle within the policy limits
despite the agreement of the insured, defendant, and claimant, the insured is
exposed to the risk of a judgment in excess of coverage, even though settlement
was available within policy limits; and
Whereas, the failure to
accept a settlement within policy limits under such circumstances undermines
the purpose of liability insurance, increases costs to the civil justice
system, and may constitute bad faith by the insurer; and
Whereas, in order to
protect insureds and promote settlement within policy limits, this act creates
a rebuttable presumption of bad-faith conduct by the insurer when certain
conditions are met. Now, therefore,
Be it enacted by the
General Assembly of the State of South Carolina:
SECTION 1.  This act may be cited as the "Bad Faith Presumption in Insurance
Settlement Offer Act."
SECTION 2.  Article 1, Chapter 59, Title 38 of the S.C. Code is
amended by adding:
    Section
38-59-60.  (A) For purposes of this
section:
       (1)
"Bad faith" means the insurer's unreasonable refusal to settle within policy
limits when liability is reasonably clear and an offer within limits is
available and accepted by the claimant and defendant, such that the insurer's
conduct falls outside of the standards of good faith and fair dealing.
       (2)
"Claimant" means the person or entity asserting a compensation claim against
the insured under the subject policy.
       (3)
"Defendant" means the insured or other party covered under the liability policy
that is being defended by the insurer against the claimant's claim.
       (4)
"Insurer" means the liability insurance company that issued the policy and is
responsible for handling and settling claims under the policy.
       (5)
"Policy limits" means the maximum amount of liability coverage available under
the insurance policy, including any applicable umbrella or excess coverage, at
the time the settlement offer is made.
       (6)
"Settlement agreement" means a written agreement signed by the claimant, the
defendant, and counsel for each of those parties, specifying resolution of the
claim for the policy limits and designated as confidential under Rule 43(k),
South Carolina Rules of Civil Procedure.
    (B)(1) A rebuttable presumption of bad
faith by the insurer shall arise if all of the following conditions are
satisfied:
  (a)
a settlement agreement has been executed by the claimant, the defendant, and
their respective counsel, in which the claimant agrees to resolve the claim
within the available policy limits, and the defendant and counsel join in that
agreement;
  (b)
the insurer, after being timely notified of the settlement agreement and given
a reasonable opportunity to accept and execute it, refuses or fails to accept
the settlement agreement and effectuate payment within the policy limits; and
  (c)
the case thereafter proceeds to trial, and a final judgment or binding
arbitration award is entered in favor of the claimant in an amount that exceeds
the insurer's policy limits.
       (2)
The insurer may rebut this presumption by presenting evidence that the refusal
to settle was reasonable under the circumstances including, but not limited to:
  (a)
existence of a material factual or legal defense;
  (b)
exposure to greater liability than reasonably anticipated at the time of the
Settlement Agreement; or
  (c)
information not reasonably available to the insurer at the time the Settlement
Agreement was proposed.
       (3)
If the presumption is not rebutted, the insurer may be liable for such
additional damages, interest, and attorney's fees as provided under existing
bad-faith law in this State.
    (C) A
settlement agreement as provided in subsection (B) must be admissible in any
subsequent bad-faith action against the insurer solely for the purpose of
establishing the presumption referenced in that section. The settlement
agreement may not be used in the underlying liability action or for any other
purpose, except as otherwise agreed by the parties or ordered by a court for
good cause shown.
    (D)
Nothing in this section may affect the underlying rights or defenses of the
insurer, insured, claimant, or defendant with respect to coverage, policy
interpretation, liability, contributory negligence, comparative fault, or other
matters in the underlying liability action, except as specifically provided in
this section.
SECTION 3.  If any section, subsection,
paragraph, subparagraph, sentence, clause, phrase, or word of this act is for
any reason held to be unconstitutional or invalid, such holding shall not
affect the constitutionality or validity of the remaining portions of this act,
the General Assembly hereby declaring that it would have passed this act, and
each and every section, subsection, paragraph, subparagraph, sentence, clause,
phrase, and word thereof, irrespective of the fact that any one or more other
sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases,
or words hereof may be declared to be unconstitutional, invalid, or otherwise
ineffective.
SECTION 4.  This act takes effect upon approval
by the Governor.
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This web page was last updated on December 17, 2025 at 01:42 PM