Bad faith insurance claims are complex from a legal standpoint and can, therefore, be difficult to understand. Fortunately, our attorneys at Presley & Presley, LLC have over 30 years of experience handling cases against insurance companies.
If you’re facing an insurer who is acting in bad faith, we’re sure you have a wealth of questions and we want to make sure we answer them in the simplest, most straightforward way possible.
To dive deeper into a topic, you can also check out archives of our Bad Faith Newsletter.
The definition of bad faith varies from state to state. In Missouri, all insurers have a duty to defend and a duty to indemnify (or compensate their clients for harm or loss). When an insurance company breaches either duty, the insured may have a cause of action for a bad faith claim.
Missouri insurance policies are regulated by “the implied covenant of good faith and fair dealing” when it comes to negotiating and providing settlements. If an insurer acts unfairly or without transparency while working on your settlement, they are likely acting in bad faith.
Missouri courts have recently recognized that a failure to provide an insured a defense can be bad faith. This normally arises from a wrongful denial of coverage. If your settlement or financial wellbeing is affected in any way by a first- or third-party insurer, you may have grounds for a bad faith claim.
First-party bad faith is very simple. If you make a claim against your own insurance company for benefits, like uninsured or underinsured motorist coverage, and the insurer fails or refuses to pay your claim, you may be allowed to claim additional damages if the failure is without reasonable cause or excuse. This is known in Missouri as a vexatious refusal to pay.
Third-party bad faith claims arise as a result of the way your insurance company handles claims made against you for someone else’s injury. If you cause an accident, for example, and the person you harmed requests full policy limits, your insurance company should fulfill the request to protect you from lawsuits if the value of the claim exceeds your coverage. If your insurer does not act in your best interest by settling the case for the policy limits when they had the chance, and now your personal assets are at risk, you may have grounds for a third-party bad faith claim.
An easy rule of thumb to differentiate first-party and third-party claims is this: first-party claims involve benefits you are owed directly under the terms of your own policy, like uninsured motorist coverage, medical payments and the like. Third-party claims involve the carrier protecting you from personal liability when you are responsible for someone else’s injuries.
Yes. In Missouri, you should have 5 years to file a formal claim against your insurance company. This is per Missouri revised statute 516.120. While state law will define the period in which your claim must be filed, you should be mindful of your insurance company’s regulations, as well.
If your insurer is found to have breached its duty to act in good faith, you can recover any damages caused by the breach. Most successful plaintiffs recover the benefits of their policy and compensation for consequential losses. Many courts will also compensate you for attorney fees and the non-economic inconveniences of having to file a lawsuit.
In Missouri, you may also be able to recover punitive damages if your insurer’s behavior was especially wrongful.
The process of gathering evidence of bad faith begins with the insurance company claim file. Typically carriers maintain a claims diary that is a computer record of all file activity. In addition, the insured should keep a record of all correspondence received from the insurance company, and detailed notes of any conversations with insurance adjusters. This will go a long way toward satisfying the burden of proving that it was more likely than not that the insurance company acted in bad faith.
This means the fact finder, usually the jury, must be reasonably certain that your insurance company is liable for your losses. A good lawyer can help you acquire this level of certainty.
Sometimes, questions this complex simply inspire more questions. If you are trying to apply the above information to your case, you may be better off meeting with one of our attorneys during a free, confidential consultation.
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