The South Carolina Court of Appeals has issued an opinion that lawsuits against insurance companies in South Carolina must be served through the South Carolina Department of Insurance. The opinion was premised on two code sections. S.C. Code § 38-5-70 Appointment of Director as Attorney for Service of Process provides that every insurer shall appoint in writing the director [of the Department of Insurance] to be its lawful attorney upon whom all legal process and action or proceeding against it must be served. S.C. Code Section § 15-9-270 Service on Insurance Companies provides that the summons and any other legal process in any action against it must be served on an insurance company as defined in Section § 38-1-20 by delivering two copies of the summons or other legal process to the Director of the Department of Insurance.
In White Oak Manor v. Lexington Ins. Co., 394 S.C. 375, 715 S.E.2d 383 (August 10, 2011) the South Carolina Court of Appeals reversed the circuit court’s entry of default against Lexington Insurance Company where the plaintiff had failed to serve the insurer through the Department of Insurance. The court also held that inclusion of a service clause in the policy did not constitute a waiver of the insurance company’s right to insist on statutory service of process. Lexington had disputed that process was effective even under the service of suit clause in the policy. Lexington also argued the circuit court erred in failing to set aside the entry of default. As the Court of Appeals concluded that the code sections referenced above are mandatory in their requirement of service of process on the Department of Insurance, the court did not address Lexington’s other challenges to the circuit court’s rulings. White Oak Manor has filed a petition for writ of certiorari in the South Carolina Supreme Court, which is currently pending. We will update this entry when the Supreme Court rules on that petition.