(4) This section applies to cases filed or removed to federal court and cases appealed in the federal court system.

SECTION 38-9-320 does not require payment of attorney's fees in every contested case won by insured; attorney's fees will not be allowed where case involves legal principles of novel impression. Nelson v. United Fire Ins. Co. of New York (S.C. 1980) 275 S.C. 92, 267 S.E.2d 604.

The payment of attorney's fees is not required in every contested case won by the insured; under this section, such fees should be awarded only when a company's refusal to pay is "without reasonable cause or in bad faith." Madden v. Pilot Life Ins. Co. (S.C. 1979) 272 S.C. 264, 251 S.E.2d 196.

Plaintiff entitled to attorneys' fees where, after full review of record, Supreme Court could not say judge erred in finding insurers did in fact unreasonably refuse to pay insured's claims. Hutson v. Continental Assur. Co. (S.C. 1977) 269 S.C. 322, 237 S.E.2d 375.

Where trial judge erroneously determined that attorneys' fees could not be awarded because insurance company had made sufficient tender, case will be remanded to trial judge for determination whether insurance company refused payment without reasonable cause or in bad faith. Cook v. Government Emp. Ins. Co. (S.C. 1976) 266 S.C. 309, 223 S.E.2d 33.

Rationale of subdivision (1) of 1962 Code Section 37-167 [1976 Code Section 38-9-320], with regard to attorneys' fees, is that no award of fees would be proper until the trial judge had made the determination that the refusal of the insurer to pay the claim was without reasonable cause or in bad faith; hence, where trial judge determined that insurer had not refused to pay claim, and therefore did not make award, Supreme Court may not make such award. Cook v. Government Emp. Ins. Co. (S.C. 1976) 266 S.C. 309, 223 S.E.2d 33.

The determination of an insurer's liability under statute providing for attorney's fees, on the grounds of wrongful refusal to pay a claim for benefits, is a matter for decision by the judge who tries the case. Coker v. Pilot Life Ins. Co. (S.C. 1975) 265 S.C. 260, 217 S.E.2d 784.

In determining an issue as to attorneys' fees allegedly due upon a bad faith refusal to pay insurance benefits, the court should consider any relevant evidence adduced upon trial of the main issue, and any other competent evidence relevant to whether or not there was lack of reasonable cause or bad faith on the part of the insurer in refusing to pay. Coker v. Pilot Life Ins. Co. (S.C. 1975) 265 S.C. 260, 217 S.E.2d 784.

8. --Particular cases

In an action for recovery of insurance benefits under a theft provision of a homeowner's policy, plaintiff could recover punitive damages for the wilful or reckless failure to settle or investigate his claim where the evidence indicated that there was virtually no effort on the part of the insurer to investigate plaintiff's claim; further, plaintiff would be entitled to attorney fees, under Section 38-9-320, since defendant's failure to adequately investigate plaintiff's claim supported a determination that the subsequent refusal to pay was without reasonable cause. Trimper v. Nationwide Ins. Co. (D.C.S.C. 1982) 540 F.Supp. 1188.

An insurer did not as a matter of law act unreasonably, fraudulently, or in bad faith in exercising its right to litigate its alleged liability under its policy, in view of the unsettled state of the law on the legal issue whether the words "loss of income due to disability" in the personal injury protection endorsement on the plaintiff's automobile liability insurance policy meant that the plaintiff should be paid for loss of time from work while visiting his doctor; accordingly, the plaintiff's recovery would not extend to attorney's fees under Section 38-9-320 or punitive damages and was necessarily limited to any loss of income to the plaintiff due to disability resulting from his accident, where the insurer's actions were not unreasonable, fraudulent or in bad faith. Wiggins v. Travelers Ins. Co. (D.C.S.C. 1979) 498 F.Supp. 211, affirmed 636 F.2d 1215.

Attorney fees were improperly awarded pursuant to Section 38-9-320 in a successful action to collect the proceeds of a life insurance policy, where the insurance company's conduct in letting the case go to trial did not demonstrate bad faith or lack of just cause since the company sought to determine whether or not the deceased had knowledge at the time the insurance contract was executed that he was "under the care of a doctor" for cancer or knew he had cancer. Strickland v. Prudential Ins. Co. of America (S.C. 1982) 278 S.C. 82, 292 S.E.2d 301.

In a successful action by the owner of an automobile destroyed by fire to recover on the policy insuring the vehicle, the award of a fee to the owner's attorney on the ground that the insurance company's refusal to settle had been without reasonable cause and in bad faith would be vacated where the verdict of $3,950 was only slightly more than the company's pretrial offer of $3,800, where the parties had reached a settlement before the owner retained the attorney who had sharply escalated his demands to as much as $5,400, and where there had been no unreasonable delay in the company's failure to retain the services of an independent appraiser until 18 months after the loss since the company had been under no duty to retain an appraiser in the first place. Brown v. State Farm Mut. Ins. Co. (S.C. 1980) 275 S.C. 276, 269 S.E.2d 769.

Interpretation of section of Automobile Reparation Reform Act of 1974 was sufficiently questionable so as to justify insurer's refusal to pay the coverage provided under a policy, and did not render insurer liable for insured's attorney's fees. Belk v. Nationwide Mut. Ins. Co. (S.C. 1978) 271 S.C. 24, 244 S.E.2d 744.

Court erred in awarding attorneys' fees to plaintiff in action to recover on insurance policy where the insurance company was justified in defending on the ground that the policy was voidable due to plaintiff's omission and concealment on application of previous visits to doctor. Baker v. Pilot Life Ins. Co. (S.C. 1977) 268 S.C. 609, 235 S.E.2d 300.

Award of attorneys fees is required by 1962 Code Section 37-167.1 [1976 Code Section 38-9-320] despite tender by insurance company of insured's out-of-pocket medical expenses, since tender must include everything to which insured is entitled, and insured was entitled to cost of medical care rendered him by United States because of his military status; fact that United States as third party beneficiary is entitled to portion of proceeds does not alter the fact that insured was the "holder" of the policy as required by the statute. Cook v. Government Emp. Ins. Co. (S.C. 1976) 266 S.C. 309, 223 S.E.2d 33.

Statute providing for attorneys' fees where an insurer refuses "without reasonable cause or in bad faith" to pay a claim, would justify such an award, where policy of insurance was issued by insurance carrier with full knowledge that the insured was a member of the Armed Forces, a full premium for medical payments coverage was collected, the amount of the claim was not in dispute, and there had been a finding that refusal to pay the claim was without reasonable cause. Blackburn v. Government Employees Ins. Co. (S.C. 1975) 264 S.C. 535, 216 S.E.2d 192.

9. Refusal to defend insured

Although the legislature did not intend that attorney fees should be paid in every contested case won by an insured, such fees were properly awarded where an insurer's refusal to defend its insured was without reasonable cause. Boggs v. Aetna Cas. and Sur. Co. (S.C. 1979) 272 S.C. 460, 252 S.E.2d 565.

When insurer refuses to defend insured under liability insurance contract and insured is compelled to conduct own defense, insured may recover from insurer reasonable expenses of litigation, including costs and attorneys fees. Sloan Const. Co., Inc. v. Central Nat. Ins. Co. of Omaha (S.C. 1977) 269 S.C. 183, 236 S.E.2d 818.

Insured has no action against defaulting insurance company where two companies insure identical risk, both policies provide for furnishing insured with defense, and one company denies liability and refuses to defend, even if insured nominally bears cost of defense, where burden is actually born by nondefaulting insurer, through guise of loan receipt, in absence of any damage flowing to insured as result of defaulting insurers refusal to defend. Sloan Const. Co., Inc. v. Central Nat. Ins. Co. of Omaha (S.C. 1977) 269 S.C. 183, 236 S.E.2d 818.

Where two companies insure identical risk and both policies provide for furnishing insured with defense, neither company, absent contractual relationship, can require contribution from other for expenses of defense where one denies liability and refuses to defend, since duty to defend is personal to both insurers and neither is entitled to divide duty. Sloan Const. Co., Inc. v. Central Nat. Ins. Co. of Omaha (S.C. 1977) 269 S.C. 183, 236 S.E.2d 818.