Section 38-59-40 - Liability for attorneys' fees where insurer has refused to pay claim(1) In the event of a claim, loss, or damage which is covered by a policy of insurance or a contract of a nonprofit hospital service plan or a medical service corporation and the refusal of the insurer, plan, or corporation to pay the claim within ninety days after a demand has been made by the holder of the policy or contract and a finding on suit of the contract made by the trial judge that the refusal was without reasonable cause or in bad faith, the insurer, plan, or corporation is liable to pay the holder, in addition to any sum or any amount otherwise recoverable, all reasonable attorneys' fees for the prosecution of the case against the insurer, plan, or corporation. The amount of reasonable attorneys' fees must be determined by the trial judge and the amount added to the judgment. The amount of the attorneys' fees may not exceed one-third of the amount of the judgment.(2) If attorneys' fees are allowed and, on appeal by the defendant, the judgment is affirmed, the Supreme Court or the court of appeals shall allow to the respondent an additional sum as the court adjudges reasonable as attorneys' fees of the respondent on the appeal.(3) Nothing in this section may be construed to alter or affect the Tyger River Pine Co. v. Maryland Casualty Co., 161 SE 491, 163 SC 229, doctrine.(4) This section applies to cases filed or removed to federal court and cases appealed in the federal court system.1999 Act No. 55, Section 38; 1989 Act No. 148, Section 50; 1972 (57) 2203] recodified as Section 38-59-40 by 1987 Act No. 155, Section 1; Former 1976 Code Section 38-9-320 [1962 Code Section 37-167.1.