What is a Bad Faith Insurance Claim in Missouri?

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Aaron House

What is a Bad Faith Insurance Claim in Missouri?

People rely on insurance companies to step up and pay claims during difficult times. Missouri law requires insurers to act in a fair, good-faith manner. When they fail to do so—such as refusing to pay a valid claim—they may be held legally liable for additional damages through a bad faith lawsuit. In this article, our Kansas City bad-faith insurance lawyer explains the key things to know about Missouri’s bad-faith insurance laws.

Bad Faith Insurance: Defined

Broadly speaking, a bad faith insurance claim arises when an insurance company intentionally denies, delays, or underpays a legitimate claim. In doing so, the insurer violates Missouri law as well as its contractual obligation to act in good faith. It is an unethical practice.

An insurer may engage in bad faith conduct to minimize payouts and maximize profits. Missouri law allows policyholders and claimants to hold companies legally liable for bad faith practices.

Understanding Vexatious Refusal to Pay in Missouri

Similar to bad faith laws, vexatious refusal to pay refers to an insurance company’s unjustified denial or delay of a valid claim. Missouri law allows policyholders to pursue legal action, potentially receiving additional compensation beyond the claim amount. Under state law in Missouri (Mo. Rev. Stat. § 375.420), a vexatious refusal to pay a claim requires proving the following three things:

  • There is a valid insurance policy in place; 
  • The insurer refused to cover losses; and
  • That refusal was without reasonable cause or excuse.

To be clear, an insurance company is not necessarily responsible for a vexatious refusal to pay simply because it improperly denied a claim. Even if you successfully overturn an insurance denial on appeal, that does not always mean that the insurance carrier acted in bad faith.

To prove liability for vexatious refusal to pay, a policyholder/claimant must establish that the insurance company did not have a reasonable cause or reasonable excuse when it initially denied the claim.

An Overview of Bad Faith Insurance Damages in Missouri

In Missouri, bad faith insurance damages aim to compensate policyholders when insurers wrongfully deny, delay, or underpay legitimate claims. These damages include the claim amount, interest, and potentially additional punitive damages.

Missouri law allows for the recovery of attorney’s fees and a penalty of up to 2% of the claim amount in cases of vexatious refusal to pay. If you have any questions or concerns about recovering financial compensation for bad faith practices by an insurer, our Kansas City lawyer is ready to help.

Contact Our Kansas City Bad Faith Insurance Attorney Today

At House Law LLC, our Kansas City insurance lawyer is a skilled and experienced advocate for policyholders and claimants. If you have questions about insurance laws, we are here to help.

Give us a call now or contact us online to set up your free, no-obligation consultation. From our Kansas City law office, we handle bad faith insurance claims in Missouri and Kansas.

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