Insurance Bad Faith in Missouri: When Insurers Break the Rules

You paid your premiums. You filed a valid claim. And then the insurance company denied it, delayed it indefinitely, or offered a fraction of what you're owed — and refused to explain why. This is not just frustrating. In Missouri, it may be illegal. Insurance bad faith is the legal term for an insurer's failure to deal fairly and honestly with a policyholder, and it can give rise to a separate lawsuit against the insurer — one that may result in damages far exceeding the original policy limits.

Taran & Associates, P.C. handles insurance bad faith cases in Southeast Missouri. This guide explains what bad faith is, how Missouri law addresses it, and what you can do when your insurance company refuses to play by the rules.

What Is Insurance Bad Faith?

Every insurance policy in Missouri carries an implied covenant of good faith and fair dealing. This is a legal obligation — not just a courtesy — that requires insurers to handle claims honestly, promptly, and without putting their own financial interests ahead of their policyholders' legitimate claims.

Bad faith occurs when an insurer unreasonably and without proper cause refuses to honor a valid claim, delays payment beyond what is reasonable, or fails to conduct a fair investigation. Missouri courts have recognized both first-party bad faith (your own insurer denying your claim) and third-party bad faith (an at-fault party's insurer refusing to settle within policy limits when liability is clear).

Common Examples of Insurance Bad Faith in Missouri

Bad faith conduct by insurers takes many forms. The most common patterns include:

Denial Without Investigation

An insurer denies a claim without conducting a reasonable investigation into the facts. Missouri law requires insurers to investigate claims promptly and thoroughly before denying them. A denial based on incomplete or fabricated grounds — without reviewing relevant medical records, police reports, or witness statements — is a red flag for bad faith.

Unreasonable Delays

Missouri's Unfair Claims Settlement Practices Act (RSMo § 375.1000 et seq.) requires insurers to acknowledge claims within 10 working days and to either accept or deny a claim within 15 working days of receiving proof of loss. Repeated requests for unnecessary documentation, shifting requirements, or simply failing to respond are all forms of bad faith delay.

Lowball Offers Without Basis

Offering a settlement amount far below the documented value of a claim — without a reasonable basis for the low figure — can constitute bad faith. This is particularly common in personal injury cases where medical bills, lost wages, and treatment costs are well-documented but the insurer offers a fraction of actual damages.

Refusing to Communicate

Failing to respond to communications, denying policyholders access to claim status information, or requiring claimants to communicate only through confusing processes designed to discourage follow-through are all bad faith practices under Missouri law.

Misrepresenting Policy Terms

Telling a policyholder that certain coverage doesn't exist when it does, or misrepresenting the facts of the accident to reduce liability, are direct bad faith violations. The insurer knows the policy terms — deliberately misrepresenting them to a claimant is fraud in addition to bad faith.

Failure to Settle Within Policy Limits

This is the most significant form of third-party bad faith. When a plaintiff's injuries clearly exceed an at-fault driver's policy limits and the plaintiff offers to settle within those limits, the at-fault driver's insurer has an obligation to accept a reasonable settlement to protect their insured from excess personal liability. If the insurer refuses — gambling that the jury will come in below the limit — and the jury verdict exceeds the policy, the insurer may be liable for the entire verdict, including the excess above the policy limits.

Missouri's Vexatious Refusal Statute

Missouri has a powerful tool for holding insurers accountable: the Vexatious Refusal to Pay statute (RSMo § 375.420). Under this law, if an insurer refuses to pay a valid claim without reasonable cause or excuse, a court may award the policyholder:

• The full amount owed under the policy
• An additional penalty of 20% of the first $1,500 of the loss, plus 10% of the remaining loss
• Reasonable attorney's fees

This statute is significant because it shifts the cost of bad faith litigation to the insurer. If an insurer wrongfully refuses to pay and loses a vexatious refusal claim, they pay the policyholder's attorney fees — making it economically viable to pursue even mid-size bad faith claims that would otherwise not justify the litigation cost.

How to Recognize Bad Faith Conduct

Not every claim denial is bad faith. Insurers have the right to investigate claims and to deny coverage when coverage genuinely does not exist. Bad faith requires unreasonableness — a denial that no reasonable insurer would make on the facts, or a delay that serves no purpose other than to pressure the claimant into accepting less.

Warning signs that your claim may involve bad faith:

• Your claim was denied with little or no explanation
• The insurer is requesting the same documents repeatedly without acknowledging receipt
• The adjuster is unreachable or stops returning calls after a claim is filed
• You received a settlement offer significantly below what your medical bills alone document
• The insurer claims coverage doesn't apply to your situation but cannot point to the specific policy language
• Weeks or months have passed with no decision on a straightforward claim
• The insurer denies liability despite clear evidence of fault by their insured

What to Do If You Suspect Bad Faith

Document everything. Bad faith cases are built on records — and the insurer has the advantage of controlling most of the records. To protect yourself:

1. Keep every communication in writing. Follow up phone calls with emails that summarize what was discussed. If an adjuster tells you something verbally, send a confirmation email within 24 hours.
2. Preserve every document. Keep every letter, denial notice, settlement offer, and correspondence from the insurer. These documents are evidence.
3. Document every delay. Record dates of calls made, messages left, and the insurer's response time (or non-response). A pattern of delay is evidence of bad faith.
4. Do not accept a lowball settlement under pressure. Once you sign a release, you cannot come back for more — even if the original offer was the product of bad faith.
5. Contact an attorney. Bad faith claims are complex and time-sensitive. Missouri's vexatious refusal statute has its own procedural requirements. An attorney can evaluate whether your situation rises to the level of actionable bad faith and what remedies are available.

Attorney Mark Taran provides free case evaluations for Missouri policyholders dealing with bad faith claims. If your insurer has refused to pay a valid claim, delayed unreasonably, or made a lowball offer without basis, call (573) 227-8841 to discuss your options.

The Bottom Line

Insurance companies owe you fair treatment. When they don't deliver it — when they deny, delay, or lowball a valid claim without reasonable cause — Missouri law gives you the tools to fight back. The vexatious refusal statute, combined with the implied covenant of good faith and fair dealing, means that bad faith conduct carries real financial consequences for insurers.

If you believe your insurance company is not dealing with you fairly, do not accept their position without getting legal advice first. Taran & Associates, P.C. serves clients throughout Southeast Missouri — in Kennett, Poplar Bluff, Cape Girardeau, Sikeston, and surrounding communities. Call (573) 227-8841 for a free case evaluation. No obligation, no fee unless you recover.

For more information about how Missouri injury claims work — and how to handle insurance companies after an accident — visit our FAQ page.