Bad Faith Refusal To Settle Claims Against Insurers In Missouri
An insurance company operates in bad faith when it fails to pay a legitimate first party claim made by an insured person without a reasonable basis. Insurance companies can face liability beyond the limits of the insurance policies they issue if they operate in bad faith.
Vexatious refusal to pay
Missouri common law does not recognize a first party claim for bad faith, as many other states do. However, when insured people and insurance companies have disputes about payment on a claim, Missouri statutes give people the right to bring lawsuits against insurance companies for bad faith, called “vexatious refusal to pay.” Sec. 375.296 R.S.Mo.; Sec. 375.420 R.S.Mo.
Some common examples of vexatious refusal to pay include a refusal to pay on a claim based on suspicion and not supported by facts, continuing to refuse to pay a claim even after the insurer recognizes it has no meritorious defense against the claim and a refusal to pay based on an insufficient investigation into the claim.
Elements of a bad faith claim
The burden of proof for proving a bad faith claim is on the insured person. The statute outlines the elements that a person must prove in order to prevail on a bad faith claim. A person must show that:
- There is a claim under an insurance contract “issued or delivered” in the state to a Missouri resident
- The claimant waited at least 30 days for payment prior to filing the suit
- The claim was in accordance with the terms of the policy
- The insurance company refused to pay on a claim made under the policy within 30 days
- The refusal to pay “was vexatious and without reasonable cause”
Courts have held that the refusal to pay must be assessed in light of the information about the claim presented to the insurance company at the time of the claim. Courts have also held that an insured person need not provide direct evidence of vexatious refusal to pay on a claim in order to be successful; the jury may infer bad faith from the totality of the circumstances presented at a trial.
The statutes allow courts to award specified damages to insured people in bad faith claims. However, bad faith claims are not supposed to be used as a means of intimidating insurance companies and preventing them from asserting defenses to claims in good faith.
Speak with an attorney
Vexatious refusal to pay cases can be complicated. Insurance companies and insured people should consult attorneys when facing issues stemming from the payment of a claim on an insurance policy in order to successfully navigate the state’s vexatious refusal to pay laws. If you have questions about an insurance claim, speak with a skilled insurance coverage attorney who can discuss your situation with you.