When insurance companies wrongfully delay or deny payment on an insurance claim, it causes more than harm and frustration. It also potentially breaches legal and contractual obligations to the policyholder. However, there are consumer protection laws that help make sure this behavior does not go unchecked.
In a previous post, we presented the potential legal remedies available to someone who has been mistreated by an insurance company. One of those remedies is a Vexatious Refusal claim. Read more below about the key elements of vexatious refusal claims, including real-life case examples and how a Missouri insurance lawyer pursues this type of claim.
What is the Missouri Vexatious Refusal to Pay Statute?
Missouri’s vexatious refusal to pay statute is a consumer protection law that holds insurance companies accountable when they refuse to pay a valid claim without reasonable or probable cause. It’s designed to prevent unfair and abusive insurance practices.
The vexatious refusal to pay statute applies to first-party insurance claims, which are claims filed by a policyholder (insured) directly against their insurance company (insurer).
Examples of claims:
- First-Party Claim: An insured files a claim with their auto insurance provider after their vehicle is stolen.
- Third-Party Claim: An insured is involved in a car accident caused by another driver, and files a claim against the other driver’s auto insurance provider.
Insurance companies are legally required to thoroughly investigate a claim, and make decisions based on a comprehensive review and evidence. If an insurer fails to do so and wrongfully denies a valid first-party claim, the policyholder may be able to pursue a vexatious refusal lawsuit.
5 Legal Requirements to Prove Vexatious Refusal:
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The Existence of a Policy with an Insurer.
If you purchased an insurance policy or you are covered under an insurance policy, you could have a claim for vexatious refusal. The Missouri vexatious refusal to pay statutes cover various types of insurance policies, including automobile, life, health and accident insurance.
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Policyholder Sustains a Loss & Files a Claim with their Insurer.
The insured files a claim under their insurance policy and makes a demand for payment.
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The Claim is Wrongfully Denied.
If the insurance company fails or refuses to pay within 30 days of the demand and the refusal is without reasonable cause, the insured can make a claim for vexatious refusal to pay.
There are statutes of limitations that may limit the time to file a claim. If you believe you have a claim for vexatious refusal, you should contact an attorney at once.
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Insurer’s Refusal to Pay is Willful & Without Reasonable Cause.
Whether the insurer’s behavior is willful and without reasonable cause will depend on the specific facts of your case. A jury may find an insurer’s behavior to be vexatious based on circumstantial evidence and surveying the whole case. Direct and specific evidence is not always required.
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Policyholder is Entitled to Damages for Breach of Contract.
Damages include the amount due under the contract, interest, and up to 20% of the first $1,500.00 of the loss and 10% of the amount of the loss above $1,500.00. Missouri statute also allows damages to include reasonable attorney fees.
Examples of Insurer Vexatious Refusal to Pay:
- Scenario #1: The insurer provides the insured with false or misleading information regarding their claim.
An insurance company may tell a policyholder (the insured) that a loss isn’t covered under their policy, even when it is. In some cases, the insurer may try to discourage the policyholder from filing a claim by warning of premium increases or claiming the process will be difficult. These tactics can delay or prevent a rightful payout, and may be considered vexatious conduct under Missouri law. - Scenario #2: There is an unwarranted or inexcusable delay in issuing payment.
Even if the insurance company eventually pays the claim, an unjustified delay can still cause financial harm. Missouri courts have found that delayed payments — especially when there is no valid reason for delay — may qualify as vexatious refusal to pay. - Scenario #3: Insurer attempts to settle a claim for significantly less than what the insurer knows is the true value of the claim.
An insurer may offer a settlement far below the actual value of the claim. By filing a vexatious refusal lawsuit, we can see the insurer’s file and internal documents outlining their claim analysis. If the insurer offered less than what they valued the claim to be, that act could be considered vexatious.
The Insurance Claim Lawyers at Padberg Appelbaum Knepper Fight for Policyholders in Missouri & Illinois
Insurance companies have a legal duty to treat their policyholders fairly. When they wrongfully delay, deny or undervalue a legitimate claim, Missouri law provides a path for justice through a vexatious refusal to pay lawsuit. These claims not only seek compensation for unpaid benefits, but also hold insurers accountable for bad-faith behavior.
If you believe your insurance company has acted unfairly or failed to honor the terms of your policy, you don’t have to face the situation alone. The experienced insurance claim attorneys at Padberg Appelbaum Knepper are here to help you understand your rights and fight for the compensation you deserve.
To leverage our trial and co-counseling experience on a vexatious refusal to pay, call the St. Louis law office of Padberg Appelbaum Knepper at (314) 621-2900 or contact us.
If you or someone you know is the victim of insurer misconduct, contact us today for a free and confidential consultation.