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Odds Against Insurers On Coverage Issues

How confident should insurors be in submitting coverage cases to Missouri appellate courts? Not very, according to a recent survey in the Missouri Lawyers Weekly. In the twelve years from 2001 through 2012 the Missouri Supreme Court decided twenty insurance coverage cases. Of those, the court decided four in favor of the insurors and sixteen in favor of the insured. The insurors lost 80% of the time, not very good odds. The last case decided in favor of the insuror was in 2008. In holding in favor of the insured, the court reversed the lower courts on twelve occasions.

Insurors had more success in the three appellate courts, Eastern, Southern and Western. In the three years 2010 through 2012 the appellate courts decided sixty three insurance coverage cases, 54% in favor of the insurors and 40% in favor of the insured with 60% favoring both sides.

Of course, these statistics do not tell the whole story. There are no available figures for how many cases the Supreme Court declined transfer thus affirming the opinion of the lower appellate court. Nevertheless, the higher up in the judicial chain the cases go, the less hope the insuror has of winning. Thirteen of the twenty cases decided by the Supreme Court were transferred at the request of the insured. In eleven of those cases the Supreme Court reversed the appellate court and found in favor of the insured. The insurors requested transfer of five cases of which the Supreme Court held against the insurors in three.

In holding against the insuror, the court most often finds the policy to be “ambiguous”. Language is ambiguous if it is reasonably open to different constructions. If the language of the policy is ambiguous, it must be construed against the insuror. Insurors are not unreasonably puzzled that policies they have issued for years and which are drafted on a national level, do not say what the insurers thought they said.

It seems that the policies which most often are found ambiguous involve uninsured motorist coverage. This is a relatively recent product and many UIM clauses are drafted by the insurance companies resulting in unintended coverage. In drafting policies, insurers must take special precautions to see that internal conflicts are avoided. For example, courts are especially critical of policies which extend coverage in one provision and take it away in another.

The Missouri courts’ tendency to find against insurance companies on coverage issues coupled with Missouri’s rather liberal rules on bad faith refusal to settle must give insurors pause when it comes to coverage decisions.

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