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Insurer Defaults After Substantial Compliance with Alternative Method of Service

The South Carolina Supreme Court has ruled that an insurer was properly held in default following its failure to answer a complaint after being served via US Mail Certified Restricted Delivery in substantial compliance with the policy terms creating an alternative method of service.
The default was upheld even though South Carolina has a statute that requires an insurer to be served through the Director of Insurance.

The case is White Oak Manor, Inc. v. Lexington Insurance Company and was decided January 15, 2014.
The relevant portion of the opinion is reproduced below:
White Oak argues the court of appeals' holding ignores the settled principle that parties are free to agree to alternative methods of service, just as they may waive service altogether. Furthermore, White Oak contends the conclusion that the Director has a right to receive copies of the pleadings is not supported by any evidence or legislative history. We agree on both points. "The purpose of the summons is to acquire jurisdiction of the person of the defendant and to give him notice of the action and an opportunity to appear and defend." State v. Sanders, 118 S.C. 498, 502–03, 110 S.E. 808, 810 (1920). Consistent with this purpose, parties are generally permitted to agree to particular methods of service or waiving service altogether. See Fin. Fed. Credit Inc. v. Brown, 384 S.C. 555, 565, 683 S.E.2d 486, 491 (2009) ("[W]here service is accomplished in a manner consented to by the defendant, service of process is valid and a court has jurisdiction over the defendant for purposes of entering judgment."); Myrtle Beach Lumber Co. v. Globe Int'l Corp., 281 S.C. 290, 292, 315 S.E.2d 142, 143 (Ct. App. 1984) ("[A] defendant may waive personal service by consent or by designating an agent to receive service of process."). Furthermore, allowing for the waiver of service is consistent with the principle that a defendant can waive personal jurisdiction. See Bakala v. Bakala, 352 S.C. 612, 629, 576 S.E.2d 156, 165 (2003) ("Objections to personal jurisdiction, unlike subject matter jurisdiction, are waived unless raised."); see also Rule 4(d), SCRCP ("Voluntary appearance by defendant is equivalent to personal service . . . .").

We therefore cannot agree it was the intent of the legislature to circumvent the long-standing rule that service can be consented to by the parties or waived entirely. 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. We have previously interpreted insurance service statutes as "designed by the legislature to provide a simple and easy method of obtaining jurisdiction over a foreign insurance company." Equilease Corp. v. Weathers, 275 S.C. 478, 483, 272 S.E.2d 789, 791 (1980). Thus, their purpose is to provide an insured with a method to obtain service of process on insurance companies; it is not to serve as a shield for insurance companies, protecting them from their own policy terms.