A Practitioner’s Guide to Insurance Coverage Disputes in Missouri
By Stephen R. Bough & M. Blake Heath[1]
SUMMARY: The complexities of densely worded provisions in lengthy insurance policies inevitably lead to disputes of whether a loss or injury is covered. These coverage disputes can arise between insurance companies and their insureds and between third parties who attempt to recover against an insurance company based on the insurance policy issued to the insured. Before assessing the liability of a possible tortfeasor in a personal injury claim with questionable insurance coverage or taking on an insurance company as a client, having some background on the various claims available under Missouri law to address coverage disputes is imperative.
Insurance is available for just about every action a person takes. Insurance exists to protect against losses of income, property or bodily injury. With insurance being sold to cover everything from cars to delays in construction contracts, it is no surprise one of the first questions that goes through any attorney’s mind when a client comes to her with a loss is, “does the other side have insurance?” In a perfect world, when a loss occurs and an insurance policy has been purchased to cover the loss, then there would be no issue with payments. Unfortunately, disputes often arise when dealing with the complex language found in insurance policies and the uncertainty for insurance companies in how the courts will interpret those polices. Consequently, it is not uncommon for insurance companies to deny claims arguing the loss simply was not covered. When an insurance company denies a claim, then the only viable option may be to seek recovery in an action against the insurance company.
Claims against insurance companies can be placed into two broad categories: Third-party claims where an injured party seeks recourse against a tortfeasor’s insurance company or first-party claims where an insured sues his own insurance company. This Article introduces the various actions against insurance companies and discusses the nuances of each theory. The key claims and the leading cases will be addressed. Each type of claim, however, is worthy of a more detailed explanation which will not be done here.
I. Third-Party Claims: Injured Party Against a Tortfeasor’s Insurance Company
Third-party claims are suits by a non-party to the insurance contract to recover under the contract. This Article will touch on the most frequent methods used to make these claims, including equitable garnishment actions and declaratory judgment actions. Continue to article
II. First-Party Claims: Insured against His Own Insurer
First-party claims involve a party to the insurance contract (either the insurer or the insured) bringing a claim against the other. While it is very unlikely that an insurance company would sue its own insured given the fiduciary relationship,[97] it does occur. This article will touch on the major claims brought in first-party suits, including declaratory judgment action related to the duty to defend, breach of contract claims, and vexatious refusal to pay. Continue to article
In a perfect world, insureds would understand all claims covered by their policies before any injuries or losses occur, and insurance companies would pay all valid claims. Unfortunately, this is not a perfect world for either the insurance companies or the insureds. Due to these complexities, coverage disputes between insureds and insurance companies are inevitable. Fortunately, Missouri provides several avenues for experienced insurance coverage attorneys to resolve these disputes and settle such claims.
[1] Stephen R. Bough is a graduate of UMKC Law School, where he served as the editor-in-chief of the UMKC Law Review. M. Blake Heath is also a graduate of UMKC Law School and served on the UMKC Law Review. Their practice is limited to representing plaintiffs in complex personal injury cases and insurance coverage disputes. The authors thank Scott Pummell, a law clerk at the firm for his excellent legal research on this article.
[97] Cox v. Steck, 992 S.W.2d 221, 225 (Mo. App. E.D. 1999).