Home » Personal Finance Articles » Bad Faith Insurance Claims in Missouri
Bad Faith Insurance Claims in Missouri
When insurance companies fail to uphold their fiduciary duties to their policyholders, a bad faith claim may be brought.
April 24, 2010 /Personal Finance PR News/ -- Bad Faith Insurance Claims in Missouri
What is a Bad Faith Insurance Claim?
Insurance companies owe special duties to their policyholders by virtue of having an insurance contract with them. When insurance companies fail to uphold their fiduciary duties to their policyholders, a bad faith claim may be brought.
In Missouri, there are two types of bad faith claims that may be brought against insurance companies: first-party claims and third-party claims. It is important to remember that only policyholders can bring bad faith insurance claims. Thus, a person injured in a car accident who is having difficulty collecting from the responsible party's insurance company cannot file a bad faith claim. Other legal action, however, may be taken to secure payment.
First-Party Claims: Wrongfully Withholding Payment
A policyholder may have a first party claim when an insurance company wrongfully denies or withholds payment for a loss covered under the insurance policy. For example, if an insured is in a one-person car accident and submits a claim to his insurance company for the damage done to his vehicle, the insurance company would be obligated to pay for this loss up to the policy limits. If the insurance company unreasonably withholds payment for a covered loss, the insured may have a bad faith insurance claim.
When insurance companies willfully and without reasonable cause refuse to pay a claim, policyholders can bring a claim for vexatious refusal to pay. This special cause of action allows policyholders to collect not only the amount owed for the claim, but also additional penalties for the insurance provider's bad acts.
In order to bring a claim for vexatious refusal to pay, the policyholder must make a demand for payment at least 30 days prior to filing the lawsuit. The loss also must be covered by the insurance policy and the insurance company's refusal to pay it must be without reasonable cause.
Third-Party Claims: Failure to Defend and Settle Claims
Insurance companies also owe fiduciary duties to their policyholders when a claim is made against them by a third-party. These duties include the duty to defend the policyholder against the claim and the duty to negotiate and settle these claims with the policyholder's best interests in mind. When insurance companies fail to uphold these duties, their policyholders may bring a bad faith claim against them.
The most common types of third-party claims are "failure to settle" claims. When a policyholder is involved in an accident that harms another person or damages their property, the insurance company generally has the exclusive right to settle the claim. This means that the insurance company -- and not the policyholder -- will enter negotiations with the injured party to see if a reasonable settlement can be reached.
While the insurance company is under no obligation to settle the claim, the insurance company does owe a duty to consider the financial and legal interests of its policyholder at least as much as its own in deciding whether or not to settle. If the insurance company places its own interests before the policyholders' and decides not to settle, then the policyholder may have a bad faith claim against the insurance company.
Generally, claims for failure to settle occur when an insurance company fails to accept a settlement offer for the policy limits under the insurance contract. The injured person then will file a lawsuit against the policyholder seeking recovery for their losses. The court may then award the injured person more than is available under the insurance policy. If the insurance company acted in its own best interests in the refusing to settle for the policy limits, then the policyholder may bring a bad faith claim against the insurance company.
Examples of Bad Faith Acts
Below are some examples of behaviors that may constitute bad faith acts by insurance companies:
- Insurance company fails to adequately investigate a claim
- Insurance company unreasonably denies payment of a covered loss
- Insurance company does not adequately explain why a claim was denied
- Insurance company fails to settle claim when liability is clear
- Insurance company fails to alert policyholder of a settlement offer
- Insurance company fails to advise policyholder of his or her policy limits
- Insurance company requires policyholder to contribute to a settlement payment that is within the policy limits
- Insurance company fails to warn policyholder of the possibility of an injured party receiving a verdict in excess of the policy limits
- Insurance company has a policy to never pay policy limits on claims
Conclusion
If your insurance company has refused to pay your claim or committed other bad acts, you may have the right to take legal action against them. For more information on bad faith insurance litigation, contact an experienced attorney today.
Article provided by Holman Schiavone, LLC
Visit us at www.kdh-law.com
---
Press release service and press release distribution provided by http://www.24-7pressrelease.com |
|
|
Press Release Contact Information:
Findlaw PR
|
|
|
|
|
| PERSONAL FINANCE ARCHIVE SEARCH |
|
|
| |
| SUBMIT PERSONAL FINANCE NEWS |
|
|
| |
|
|
Advertise With Us |
About Us |
Contact Us