Insurers and attorneys in South Carolina have long recognized that the exclusive means of service on an insurer is through the Department of Insurance pursuant to S.C. Code § 15-9-270 (“The summons and any other legal process in any action or proceeding against it must be served on an insurance company . . . by delivering two copies of the summons or any other legal process to the Director of the Department of Insurance . . . .”); e.g. Equilease Corp. v. Weathers, 272 S.E.2d 789, 792 (S.C. 1980) (compliance with section 15-9-270 “is the proper and exclusive method of obtaining jurisdiction over the insurance company.”).
Not so says the Supreme Court, at least where the insurer has contractually agree to service by alternative means in the policy. In White Oak Manor v. Lexington Insurance Company, Opinion No. 27351 (S.C. January 15, 2014), the carrier was held in default after failing to respond to the declaratory judgment complaint seeking coverage for an underlying lawsuit settled by the insured. White Oak did not serve the carrier through the Department of Insurance, but instead relied on a provision in the policy that provided the following:
It is further agreed that service of process in such suit may be made upon Counsel, Legal Department, Lexington Insurance Company, 200 State Street, Boston, Massachusetts 02109 or his or her representative. . . .
White Oak served the complaint by certified mail at the insurer’s Boston address, then successfully moved for an entry of default after the carrier failed to respond within 30 days. The carrier subsequently appeared and contested default on grounds that service was ineffective, but the circuit court refused to set aside the default and entered a judgment against the Lexington for $153,266. The Court of Appeals reversed, holding that service on the Department of Insurance pursuant to S.C. Code § 15-9-270 was the exclusive means to perfect service on a carrier in South Carolina.
The Supreme Court accepted the case for review and reversed, holding that policy provisions creating alternative methods of service are valid and binding on insurers. The Court found that the well-settled principle that parties are free to agree to alternative methods of service or waive service altogether, is equally applicable to insurers notwithstanding section 15-9-270.
Service of process is intended to provide notice and obtain personal jurisdiction, and Lexington designated in its policy a method for an insured to accomplish both those goals. We hold Lexington is bound by its own policy’s terms. We reject the notion that the statute is intended to allow an insurance company to prescribe a method of service in its policy and then declare its own provision invalid under section 15-9-270.
The White Oak decision has far-reaching implications for insurers and counsel who previously relied on statutory service through the Department of Insurance as the exclusive means of service. While service through the Department of Insurance remains effective, policies should be reviewed for similar service-of-suit clauses that provide alternative methods of service.