A bad-faith claim is a legal action that allows policyholders to hold an insurance company accountable when it acts unreasonably in handling a claim. Under Missouri law, insurers are required to act in good faith, which means they must deal fairly with their customers and avoid using deceptive practices.
When an insurance company fails to meet those duties, such as by refusing to settle a legitimate claim or delaying payment without justification, it can be found to have acted in bad faith. A successful claim can entitle the policyholder to recover damages beyond the original value of the insurance policy, including punitive damages in some cases.
Missouri Law on Bad-Faith Insurance
Missouri recognizes both first-party and third-party bad-faith claims. Each applies in different contexts:
- First-party bad faith occurs when your insurer fails to handle your own claim properly. For instance, this could include denying a valid car accident claim.
- Third-party bad faith applies when your insurer mishandles a claim made against you by someone else. This might apply, for example, to refusing to settle a personal injury lawsuit within your policy limits.
Under Missouri Revised Statutes §375.296 and §375.420, an insurance company can be held liable for acting in bad faith.
Examples of Bad-Faith Insurance Conduct
Bad faith doesn’t just mean an insurer made a mistake and denied a claim you disagree with. It goes a bit further and means the company acted unreasonably or dishonestly in some way.
Some examples of bad-faith behavior include:
- Unreasonably delaying payment of a valid claim
- Denying coverage without conducting a proper investigation
- Misrepresenting policy terms or exclusions
- Failing to respond to communications or provide claim updates
- Offering settlements far below the claim’s actual value
- Refusing to defend you in a lawsuit when the policy requires it
Each of these actions may violate Missouri’s duty of good faith and fair dealing.
How a Bad-Faith Claim Works in Missouri
In most cases, a bad-faith claim arises when an insurance company denies a claim, delays payment, or fails to settle a case within the policy limits. The insured, or sometimes a third party through an assignment of rights, can then bring a lawsuit alleging bad faith.
To succeed, the plaintiff generally must show:
- The insurer had an obligation to act in good faith.
- The insurer failed to do so through inappropriate conduct.
- The policyholder suffered financial harm because of that failure.
In third-party bad-faith cases, Missouri courts often examine whether the insurer prioritized its own financial interests over those of the policyholder. For instance, if an insurance company refuses to settle a truck accident case within the insured’s policy limits and a jury later awards a higher amount, the insurer could be responsible for the entire judgment.
Damages in a Missouri Bad-Faith Claim
If a policyholder proves bad faith, Missouri law allows for recovery of damages beyond the amount of the original claim. These may include:
The total judgment amount in a third-party case, even beyond policy limits
- Attorney’s fees and litigation expenses
- Interest on unpaid claims
- Additional compensation for financial losses caused by the delay
Punitive damages may also be available, but only in rare cases when the insurer’s actions are proven to be particularly malicious.
What to Do if You Suspect Bad Faith in a Missouri Personal Injury Case
If you believe your insurance company is acting in bad faith, take the following steps:
- Document everything that you can: Keep copies and record all correspondence between you and the insurance company, including emails and other communications like phone calls
- Request a written explanation: Insurers are required to provide reasons for a claim denial or delay.
- Review your policy carefully: Make sure you understand what’s covered and what exclusions might apply.
- Set up a free consultation with an experienced attorney: A Missouri bad-faith insurance lawyer can evaluate whether the insurer violated state law and help you build a case if possible.
Don’t assume that an insurance company’s word is final; many policyholders win significant recoveries when bad faith is proven.
Contact Roach Law Car Accident Lawyers for a Free Consultation With a St. Louis Bad Faith Insurance Lawyer
When you pay insurance premiums, you expect your insurer to protect you when it matters most. Unfortunately, not all companies honor that responsibility. Missouri law gives you powerful tools to respond if your insurer acts in bad faith.
If you suspect your claim has been mishandled or wrongfully denied, speak with an experienced St. Louis bad faith insurance lawyer today. Call Roach Law Car Accident Lawyers today at (636) 519-0085 to arrange a free consultation.