Missouri does not recognize a common legal right to bring an action for breach of good faith and fair trade for a first-party insurance claim. Instead, Missouri statutory law allows policyholders the right to hold insurance companies accountable for their "alarming" refusal to pay.
I wrote about Missouri's huge refusal to pay laws eight years ago Vexatious Refusal to Pay Insurance Claims in Kansas City, Missouri . I noted that the specific jury instruction and law that allows the policyholder to get a penalty as well as reasonable attorney fees against the insurer.
In a decision taken on Tuesday, 1 a federal district court in Missouri discussed Missouri's vehement refusal to pay laws and updated the law I quoted earlier:
Under Missouri law, an insured person can recover damages. and law firms when an insurance company refuses to pay for a "loss under insurance" if the company "has refused to pay such loss without reasonable cause or excuse." MO. TURN. STATISTICS. § 375.420. When an insured claims that the insurer has refused to pay an insurance claim, the insured must prove: (1) the existence of an insurance with the insurer; (2) that the insurer refused to pay the insured's losses, and (3) the insurer's refusal was without reasonable cause or excuse. Qureshi v. Am. Family Mut. Ins. Co. 604 SW3d 721, 727 (Mo. App. ED 2020).
& # 39; [W] whether an insurer's refusal to pay is concerned or not must be determined by the situation presented to the insurer the time it was asked to pay. & # 39; Russell v. Farmers & Merchs. Ins. Co. 834 SW2d 209, 221 (Mo. App. SD 1992) …. & # 39; In general, whether an insurer acted reasonably is a matter of fact for the jury, and it is thus inappropriate for a court to decide when granting a summary judgment. & # 39; Welsh v. Nationwide Affinity Ins. Co. of Am. No. 17-CV-00090, 2017 WL 7037744, (W.D. Mo. 6 December 2017) …. The statutes for violent refusal are “criminal in nature and narrowly interpreted; their purpose is to deter the insurer from refusing to pay after becoming aware that it has no meritorious defense against the insurance claim. ”
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Vexatious refusal claims have been upheld by Missouri courts where an insured's "refusal is based on a suspicion, rather than a reasonable conclusion of established facts."
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Furthermore, under Missouri law, "direct and specific evidence to prove dangerous refusal may not be required," and a jury "may find a dangerous delay in a public inquiry and a consideration of the entire testimony and all the facts and circumstances of the case."
The last part of the court's discussion is important and is often overlooked. Adjusting good faith requires that insurance adjusters make decisions based on facts, not speculation, after a full investigation. Often when an insurer makes the wrong decision, the insurer does not determine investigation facts because the investigation is not thorough and creates only speculation, which is then used to deny claims.
Insurers who want to reject claims often only look at evidence in a way not to consider competing opinions, and do not want complete facts that would show coverage or larger amounts due.Full investigation for these insurance companies requires more money to do a adjustment job properly and may give reason to pay more. No wonder that a complete investigation is a good faith task that insurers who want to do their job in good faith teach their indemnity staff and demand of their independence.
Policyholders in Missouri have rights when an insurance company treats them incorrectly. The statutory law provides a sanction, and juries may apply them against wrongful delay and denial by insurance companies.
Thought For The Day
In Missouri, where I come from, we do not talk about what we do – we just do it. If we talk about it, it's seen as bragging.
1 Competitive Services International v. Midwest Family Mutual Ins. Co. Nos. 19-395 (W.D. Mon. June 1, 2021).