Bad Faith Failure To Settle

What Is Bad Faith Failure To Settle?

It’s when and insurance company will not reasonably settle a claim and damages its insured, or customer, in Missouri.

Bad Faith is “the intentional disregard of the financial interest of Insured in the hope of Carrier escaping the
responsibility imposed upon by its policy.” Scottsdale Ins. Co. v. Addison Ins. Co., 448 S.W.3d 818, 828 (Mo. 2014)

It is well established that an insurer owes to its insured a duty to act in good faith in settling a claim against
the insured and that the insurer may be liable to the insured when it breaches this duty.

“I’ve dedicated my entire life to helping our clients receive full compensation for their injuries.”

Schedule a free case evaluation here.

Gary Burger

Litigation attorney

An insurance company cannot gamble with the insured’s assets:

The Legal Elements

1. the liability insurer has assumed control over negotiation, settlement, and legal proceedings brought against
   the insured;
2. the insured has demanded that the insurer settle the claim brought against the insured;
3. the insurer refuses to settle the claim within the liability limits of the policy; and
4. in so refusing, the insurer acts in bad faith, rather than negligently.

The existence of bad faith is a question of fact to be determined on a case-by-case basis. In situations where an
insurer fails to inform the insured of settlement offers and the status of negotiations, the second requirement that
the insured demand that the insurer settle the claim is not necessary to show bad faith.

Bad faith is a state of mind indicated by the Carrier’s acts and circumstances and can be proven by circumstantial
and direct evidence.” Johnson v. Allstate Ins. Co., 262 S.W.3d 655, 662 (Mo. Ct. App. 2008)

My friend Debbie Champion and I did three great podcasts a bit ago
on insurance coverage and bad faith. Here are links to them if you want to listen.

1. Insurance Coverage
2. All About
   Insurance II
3. All About
   Insurance III

Typical Conduct Showing Bad Faith

• Not fully investigating and evaluating a third-party claimant’s injuries;
• Not recognizing the severity of a third-party claimant’s injuries and the probability that a verdict would
  exceed policy limits;
• Refusing to consider a settlement offer;
• Not advising an insured of the potential excess judgment or settlement offers; or
• Failing to properly communicate with Insured.

Let’s take a closer look at some signs an insurance company might be acting in bad faith regarding a claim. 

Insufficient investigation

One of the first indicators of bad faith is when an insurance company refuses to thoroughly investigate your claim. They have a duty to gather all necessary information and assess the validity of your claim. If they fail to conduct a timely and adequate investigation, it can signal bad faith on their part.

Unreasonable delays

Another factor to consider is when an insurance company unreasonably delays the processing of your claim. While insurance companies have a reasonable amount of time to investigate, evaluate, and settle your claim, they should not drag the process out unnecessarily. If you feel that the insurance company is intentionally delaying your claim without justification, it could be a sign of bad faith, and you should call a lawyer.

Unreasonable offers and refusing to consider counteroffers

Furthermore, an insurance company may engage in bad faith practices if they make unreasonably low settlement offers. They have a duty to fairly evaluate your claim and make a reasonable offer based on the damages you have suffered. If the insurance company consistently undervalues your claim, it could be a sign that they are acting in bad faith. This is especially true if your injuries likely would exceed policy limits.

Further, if you counteroffer with a reasonable amount that you would accept for your injuries and the insurance company refuses to even consider it, they can be acting in bad faith. The company might be severely downplaying your injuries when they offer unreasonably low amounts or reject your reasonable counteroffers.

Wrongful denial without valid reasons

Additionally, insurance companies may act in bad faith by refusing to provide a valid reason for denying your claim. They should clearly communicate the grounds for their decision and provide a detailed explanation. If the insurance company fails to provide a reasonable justification for denying your claim, it may be a sign of bad faith.

Failing to properly communicate

Finally, if an insurance company fails to communicate with you or respond to your inquiries about your claim, it could indicate bad faith. They have an obligation to keep you informed about the progress of your claim and address any concerns or questions you may have. If they consistently ignore your attempts to contact them, it may be an indication that they are acting in bad faith.

If you notice any of these signs and do not yet have an attorney handling your claim, you should reach out now. There is a chance that legal representation can help the insurer act more reasonably and settle your claim without further conflict. 

However, sometimes even strong legal counsel cannot convince an insurer to be reasonable. Sometimes, companies will dig in and stay determined to act in bad faith regarding your claim. In these cases, our skilled law firm can look into the possibility of a bad faith failure to settle claim in court under Missouri law.

The tort of bad faith failure to settle creates liability to compensate [I]nsured when [I]nsured has been wrongly
subjected to an excess judgment and to deter [Carriers] from failing to fulfill fiduciary duties to their Insureds.
Shobe v. Kelly, 279 S.W.3d 203, 279 (Mo. Ct. App. 2009)

Remember that “an insurer’s ultimate settlement for its policy limits does not negate the insurer’s earlier bad faith
refusal to settle and that an excess judgment is not essential to a bad faith refusal to settle action” Scottsdale
Ins. Co. v. Addison Ins. Co., 448 S.W.3d 818, 821 (2014).

Remember that you have to try and get a verdict over the policy limit int he underlying case in order to for the
insured to have a bad faith claim against the insurance company which they can then assign to you.

So how do you successfully ensure that you can prove bad faith? Well – hire me and I will do my best to make that
happen. I cannot give away all my secrets 😉

There are many other issues such as 537.058 letters which enable you to get written demands into evidence in Bad
faith trials. But there are other issues too, like 537.065 agreements, reservations of rights, Hammer letters,
documenting bad faith, duty to defend, interpretation of insurance policies, etc. Rather than further getting in the
weeds on this, give us a call at (314) 500-HURT to discuss.

Gary Burger

Founder | Injury Attorney
Gary Burger has dedicated his career to standing up against bullies. The founder and principal attorney of Burger Law | St. Louis Personal Injury Lawyer has helped hundreds of Missouri and Illinois individuals and families recover th …
Years of experience: 30 years
Location: St. Louis, MO

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