A bad faith claim occurs when an insurance company does not fulfill its contractual obligation to a person who has purchased insurance coverage (known as an “insured”). Every state has different laws governing an insurance company’s obligation to an insured. Sometimes insurance companies act in bad faith by denying a legitimate claim against their insured without providing reasonable justification, or by failing to process a legitimate claim within a reasonable amount of time. Any attempt to avoid paying out a legitimate claim is made in bad faith, and bad faith claims can apply to many types of insurance policies—including automobile insurance.
Duties Does Your Insurance Company Owes to You
- Under Missouri law, if liability of an insurance company’s client is alleged that is potentially covered by their insurance policy, the insurance company has a contractual obligation to defend a civil action relating to it.
- The insurance company must make a good faith effort to defend the insured individual against a judgment that would exceed the insured individual’s policy limits.
- The insurance company has a duty to review claims promptly. Failure to respond in a reasonable amount of time can constitute bad faith and can result in the insurance company being liable for subsequent damages or liability stemming from the delay.
- Your insurance company does not have a duty to cover every claim, however, if they deny a claim, or only approve partial coverage, they must provide reasonable justification for their decision.
- Failure to review or properly consider the facts of a claim before denying coverage constitutes bad faith.
What Bad Faith is and is Not
Bad faith does not apply to mistakes or mere disagreements; however, if the adjuster fails to provide reasonable support for their decision, that can be evidence of bad faith. Insurance companies can minimize their risk of acting in bad faith by providing explanations when they refuse a claim or deny partial coverage.
Bad Faith in Missouri
Bad faith claims in Missouri apply when an insurance company fails to defend its insured. But insurance companies can also commit vexatious refusal under Section 375.296 of the Missouri statutes.” This occurs when an insurance company refuses to pay for covered damages incurred by its own insured. For example, these claims can arise under uninsured or underinsured motorist provisions and under homeowners policies. For this reason, if you have been injured and believe that your insurance company has unfairly denied your claim or has not appropriately valued your claim, it is a good idea to speak with an experienced Insurance Lawyer to learn about your options.
Prevailing in a Vexatious Refusal Lawsuit
As a threshold issue, when considering filing a vexatious refusal lawsuit against your insurance company, it is important to make sure that the denied claim was eligible for coverage under your insurance policy. The burden of proof for establishing vexatious refusal to pay rests on the insured individual. If successful, the insured individual can collect damages, the amounts of which are specified in the statutes.
Call a Kansas City, Missouri Insurance Attorney
If you believe your insurance claim has been denied in bad faith, or that your insurance company’s negligence has resulted in financial harm, it is important to contact an experienced Kansas City, Missouri Insurance Lawyer as soon as possible. The attorneys at House Law LLC will assess your specific circumstances and help you determine whether a lawsuit is the best way to seek justice and financial retribution. Call 816-875-4260 to schedule your free consultation today.