Insurance Bad Faith

When you pay insurance premiums for years and your insurer refuses to honor the deal when you need it most, you have more than a complaint — you have a legal claim. Joseph Ott represents policyholders across Missouri against insurance companies that deny legitimate claims, drag out investigations, lowball settlements, and force injured people into unnecessary litigation. The insurance industry profits when policyholders give up. We make sure they do not.

What Is Insurance Bad Faith Under Missouri Law?

Every insurance policy in Missouri carries an implied duty of good faith and fair dealing. This means your insurer must investigate your claim promptly, evaluate it honestly, and pay what is owed without unreasonable delay or obstruction. When an insurance company breaches this duty — whether by ignoring evidence, misrepresenting policy language, or refusing to negotiate in good faith — the insurer faces liability that extends far beyond the original policy limits.

Missouri courts have long recognized that the relationship between insurer and policyholder is not an arms-length commercial transaction. You pay premiums in exchange for a promise of protection. When the insurer breaks that promise, the law provides remedies designed to hold them accountable and make you whole.

RSMo 375.420 — Vexatious Refusal to Pay

Missouri's most powerful statutory tool for policyholders is RSMo 375.420, the vexatious refusal to pay statute. When an insurer refuses to pay a claim without reasonable cause or justification, the court may award the policyholder the full amount owed under the policy plus attorney fees and a damages penalty. The penalty is calculated at twenty percent of the first fifteen hundred dollars and ten percent of the remainder of the claim.

This statute shifts the economics of insurance disputes. Without it, insurers can deny claims knowing that most policyholders cannot afford to hire an attorney and litigate for months or years. RSMo 375.420 ensures that when an insurer's refusal is found to be vexatious, the policyholder recovers not only what was owed but also the cost of forcing the insurer to pay. It is the primary weapon Ott Law Firm uses to level the playing field between individual policyholders and billion-dollar insurance companies.

Three Types of Bad Faith Claims in Missouri

First-Party Bad Faith

First-party bad faith occurs when your own insurance company — the one you pay premiums to — refuses to honor a legitimate claim under your policy. This includes homeowners insurance denials after storm damage, health insurance claim denials for covered treatment, auto insurance companies refusing to pay under your own uninsured or underinsured motorist coverage, and disability insurers cutting off benefits despite ongoing medical documentation. In first-party cases, the insurer owes a direct duty to you as their policyholder, and breaching that duty exposes them to liability beyond the policy limits.

Third-Party Bad Faith

Third-party bad faith arises when a liability insurer fails to settle a claim against its insured within policy limits when it reasonably should have done so. If an insurer refuses a reasonable settlement demand and the case goes to trial resulting in a verdict that exceeds the policy limits, the insurer may be liable for the entire judgment — not just the policy amount. This type of bad faith is particularly significant in personal injury cases where the at-fault party's insurer gambles with their own policyholder's financial future by refusing to settle.

Statutory Vexatious Refusal

Under RSMo 375.420, a policyholder can bring a standalone statutory claim when an insurer's refusal to pay lacks reasonable justification. This claim does not require proving the insurer acted with malice or intent to harm — only that the refusal was vexatious, meaning it lacked a reasonable basis. Courts evaluate the totality of the circumstances, including the strength of the policyholder's claim, the adequacy of the insurer's investigation, and whether the insurer had a legitimate coverage defense.

Common Insurer Tactics

Insurance companies that act in bad faith typically rely on a predictable set of strategies designed to wear policyholders down and minimize payouts.

Delay. Dragging out claim investigations far beyond any reasonable timeline. Requesting redundant documentation. Assigning and reassigning adjusters. The goal is to exhaust you financially and emotionally until you accept less than you are owed or abandon the claim entirely.

Deny. Issuing boilerplate denial letters that cite policy exclusions the adjuster knows do not apply. Ignoring favorable medical evidence. Mischaracterizing the facts of the claim. Many denial letters are designed to look final and authoritative when they are neither.

Defend. Forcing policyholders into litigation on claims the insurer knows are valid. Some carriers calculate that the cost of litigation will deter all but the most determined claimants. They are betting you will not fight back.

Lowball. Offering a fraction of the claim's actual value — often within days of the loss — hoping that financial pressure will push you into accepting. Adjusters are trained to present lowball offers as generous and final. They rarely are.

What You Can Recover in a Bad Faith Case

When an insurer acts in bad faith, Missouri law provides remedies that go well beyond the original policy benefits:

• Policy benefits owed — The full amount the insurer should have paid from the beginning
• Attorney fees — Under RSMo 375.420, the insurer pays your legal costs when their refusal is found vexatious
• Statutory penalty — Twenty percent of the first fifteen hundred dollars and ten percent of the remainder under RSMo 375.420
• Consequential damages — Financial harm caused by the insurer's delay or denial, including lost income, credit damage, and additional medical expenses incurred while waiting for coverage
• Punitive damages — In egregious cases where the insurer's conduct demonstrates willful disregard for the policyholder's rights, Missouri courts may award punitive damages to punish the insurer and deter future misconduct

Video: When an Insurer Refuses or Delays Payment

Watch “When Insurance Companies Act in Bad Faith” on YouTube.

A denial, delay, or low offer does not by itself establish bad faith; the policy language, claim evidence, investigation, and insurer's stated basis all matter. Missouri's vexatious-refusal statute, RSMo 375.420, permits specified damages and attorney fees when an insurer refuses payment without reasonable cause or excuse. Preserve the policy, proof of loss, denial letters, estimates, medical records, and every written communication so the insurer's position can be evaluated against the record.

Proven Results Against Bad Faith Insurers

Ott Law Firm has secured policy-limits settlements for clients using aggressive bad faith strategies, including demand letters under Mo. Rev. Stat. 537.065 that put insurers on notice of their excess exposure. When insurers know you have counsel who understands the full range of remedies available under Missouri law, their calculus changes.

Free Consultation — No Fee Unless We Win

If your insurance company has denied your claim, delayed payment without justification, or offered far less than your claim is worth, contact Ott Law Firm for a free consultation. We handle insurance bad faith cases on a contingency fee basis — you pay nothing unless we recover compensation for you. You will have direct access to attorney Joseph Ott from your first call through resolution of your case.

Call (314) 710-2740 or contact us online to discuss your insurance dispute. We represent policyholders throughout Missouri against insurers of all sizes, and we are prepared to take your case to trial if that is what it takes to get you the result you deserve.

Serving Missouri Insurance Bad Faith Clients Statewide

Ott Law Firm represents policyholders in insurance bad faith disputes throughout Missouri. Insurance bad faith claims are filed in Missouri circuit courts based on where the policyholder is located or where the dispute arose. We handle bad faith cases for clients in the St. Louis metro area — including St. Charles, O'Fallon, Chesterfield, Florissant, Clayton, Kirkwood, Ballwin, and Wildwood — as well as clients in Kansas City, Springfield, Columbia, Jefferson City, and across Missouri.

Whether your dispute involves a homeowners policy, auto insurance, or commercial coverage, Ott Law Firm is available for a free consultation.