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INSURANCE COVERAGE SWR Insurance Coverage Group |
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Fall 2011 |
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Sanders Warren & Russell LLP |
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STATE OF THE LAW: Third-Party Extra-Contractual Liability In State of Missouri |
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In Missouri, an insurer’s potential extra-contractual liability to an insured arising out of third-party settlement demands within policy limits when the insured has allegedly injured a third party, often referred to as “bad faith,” is considered to be a tort claim rather than a contract claim. One distinction is important here: Missouri recognizes the tort of “bad faith” in the context of third-party liability insurance (i.e. auto liability, homeowners liability, commercial general liability, etc.), however it is not applicable in cases where there is a dispute concerning first-party coverage (i.e. UM, UIM, property damage, etc.). Since it is a tort, an insured who makes a claim against an insurer based upon “bad faith” may seek, in addition to all damages causally related to the “bad faith,” punitive damages. A claim for “bad faith” refusal or failure to settle belongs to the insured only and cannot be prosecuted by the underlying plaintiff absent a valid assignment of the claim. Assignments of such claims are unusual at this time because it is very questionable whether an insured can validly assign an unliquidated claim for bad faith to the plaintiff or any other person. See dissenting opinion of Judge Smart’s separate concurring opinion in Johnson v. Allstate Ins. Co., 262 S.W.3d 655, 672 (Mo.App.W.D. 2008). In Missouri, the recognized elements necessary to establish a submissible case for “bad faith” appear to be the following: (1) the insurer had the opportunity to settle a third-party claim against its insured within policy limits; (2) it acted in bad faith in refusing to settle; and (3) caused the insured damages as a result. Shobe v. Kelly, 279 S.W.3d 203 (Mo.App.W.D. 2009). It is also stated in various cases in Missouri that an additional necessary element is that the “insured has demanded that the insurer settle the claim within the limits.” Dyer v. General American Life Ins. Co., 541 S.W.2d 702 |
Disclaimer: The information you obtain in this publication is not, nor is it intended to be, legal advice. Sanders Warren & Russell LLP makes available the material in this publication for informational purposes only. You should consult an attorney for individual advice regarding your own situation. Transmission of information via this publication is not intended to create, and receipt of information does not constitute, an attorney-client relationship. If you have any questions concerning the information contained in this publication, one of our firm's attorneys would be pleased to discuss in greater detail the information and its application to your particular situation. |
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