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After suffering a significant injury, most people understandably concentrate on the relatively straightforward elements of damages and liability. In doing so, however, injured parties and their attorneys may overlook the most important options for a significant recovery. Most accidents involve some form of insurance. Insurers, in turn, may offer products that are designed to compensate victims, yet these same companies later have a strong economic incentive to deny or limit claims made by injured parties in order to maximize their profits.

Consequently, many people who concentrate solely on liability or damages as a result of an accident do not recover all of the funds to which they are entitled when they simply accept the insurer’s coverage determination. Alternatively, those with knowledge of Missouri law as it applies to insurers occasionally capitalize on these opportunities by contesting coverage issues and, thereby, maximize their recovery.1 This article addresses the most common coverage issues for parties dealing with insurance companies.


Insurance companies will often respond to an alleged claim by providing a copy of the “insurance policy” which is really simply the declaration page (rather than all the policy terms and conditions) and then will state the insurer’s position as to whether any money is available. Injured parties and their representatives are well advised to not simply accept the insurer’s own conclusion as to what is covered, but to demand a complete copy of the insurance policy and review all of its terms in light of Missouri law. In doing so, insured parties may find they are entitled to significantly more money and protections than the insurer has initially stated.

Insurance policies are drafted with relatively short sections regarding what is covered and then pages and pages of endorsements and restrictions that purport to reduce or eliminate that coverage. Insurance policies are also drafted solely by the insurer with little or no opportunity for the insured to bargain about the terms of the policy itself. For these reasons, Missouri law actually provides many important protections to consumers (if they know where to find them).

Under Missouri law, insurance policies are interpreted from the perspective of a reasonable insured. Terms used in the policy, unless specifically defined, are to be given a normal, every-day definition that is understandable to the party purchasing the insurance. If policies are written ambiguously, then the ambiguity is to be interpreted in favor of the insured and against the insurer; for example, when one provision of a policy purports to provide coverage and another purports to eliminate that coverage, then courts will often find in favor of the insured and rule that coverage exists.2 In short, if insureds

1 Riley & Dunlap’s case of Schmitz v. Great American Assurance Co., which began with every insurer

denying any obligation to pay a penny, ended with one insurer paying $700,000.00, another insurer paying $750,000.00 and a third insurer paying more than $3,000,000.00. 337 S.W.3d 700 (Mo. banc 2011).



can make a reasonable argument that there is coverage, courts will often find in their favor. These general rules of construction should be considered and applied to any insurance policy.



Motor vehicle policies sold in the State of Missouri are required to include uninsured motorist coverage, sometime called “UM” coverage.3 Most policies provide $25,000.00 in coverage for each insured vehicle, and these limits can (and should) be increased. It is extremely important to note that uninsured motorist coverage applies to the individual insured and is not restricted simply for the automobile to which the coverage was issued. Consequently, if you are injured by an uninsured driver, then in most cases you should be able to recover against your uninsured motorist policy regardless of the vehicle in which you were driving (or even whether you were outside a vehicle).

The term “uninsured motorist” applies not only to an individual who has no insurance, but also applies to a hit-and-run motorist who cannot be identified.4 Also, a motorist who has insurance coverage that falls below the $25,000.00 required under Missouri law, such as insurance issued from another state that might have lower required limits, is an uninsured motorist. So, it is important to recognize that “uninsured motorist” is a broader term than one would initially realize.

The most important advantage to insureds, however, is the ability to recover uninsured motorist payments from multiple policies or from one policy covering multiple vehicles. If an insured has one policy covering multiple vehicles, there will be uninsured coverage of at least $25,000.00 issued with respect to each car on that one policy. Alternatively, if an insured has different insurance policies for different vehicles, then, again, each policy should provide for at least $25,000.00 of uninsured coverage for each vehicle listed on them. Many insureds believe that they can recover against only the policy that was issued with respect to the vehicle they were driving at the time of the accident, but this isn’t the case.

Under Missouri law, insureds are able to recover against each uninsured motorist coverage, whether contained in one policy or different policies.5 So, if an insured is injured by an uninsured motorist while driving one car, she can usually recover from the (at least) $25,000 of uninsured motorist coverage from that car and every other insured vehicle she has. This is referred to as “stacking” and can greatly increase the pool of resources against which an insured may recover—up to the value of their injuries, of course. Stacking uninsured motorist policies, in this way, is one of the most important protections provided by Missouri law.

3 Section 379.203, RSMo.; Cameron Mut. Ins. Co. v. Madden, 533 S.W.2d 538 (Mo. banc 1976).



While uninsured motorist coverage and underinsured motorist coverage sound similar, they are deceptively different under Missouri Law. In general, uninsured motorist coverage applies when the responsible party has no insurance while underinsured motorist coverage (sometimes called “UIM” coverage) theoretically applies when the responsible party’s insurance is insufficient. Moreover, while Missouri law mandates uninsured motorist policies be stacked, it does not require that one’s underinsured motorist coverage be treated in the same way.6 In fact, underinsured motorist coverage is not even required to be issued by Missouri insurance companies. If a Missouri resident does not purchase this additional coverage, then they are not entitled to collect from their own insurer if hit by a driver who has, for example, a minimum of $25,000.00 of coverage even if the resident has $100,000.00 or more in damages. Consequently, Missouri consumers should always purchase underinsured motorist policies.

The law with respect to underinsured motorist policies is replete with opportunities for insurance companies to deny coverage that the insured would reasonably expect. For example, consider a situation in which you are injured by a driver who has $100,000.00 in liability limits, you have underinsured coverage of $100,000.00, but you suffer over $500,000.00 in damages. Since you have $500,000 in damages and the other driver has only $100,000 in coverage, you would normally expect to be able to recover (at least) $100,000 from your underinsured motorist coverage. Insurers, however, can define their underinsured motorist coverage so that the other driver in this case would not be considered to be an “underinsured motorist” because the driver has insurance limits ($100,000.00) that equaled the limits of your own underinsured coverage ($100,000.00).7 By defining what an “underinsured driver” is in this way, many Missouri consumers do not have the sort of protection they believed was afforded by their policy. Everyone should review his insurance policy very carefully to avoid this result.

If an insured does have underinsured motorist coverage on multiple vehicles in one policy or through multiple policies, then the question arises as to whether one can recover from more than one underinsured policy; in other words, whether one can stack the underinsured motorist coverage just like one can stack uninsured coverage. Missouri law does not mandate underinsured motorist policies to be stacked.8 Therefore, insurance companies try to draft their policies to prohibit stacking. Yet, unless insurers draft their policies so clearly that they unambiguously prevent stacking, an insured may prove that the anti-staking provisions are ambiguous and, then, can stack all of the underinsured policies There are many examples of insurers who have attempted to prohibit stacking, but have failed through drafting ambiguous policy provisions. For instance, in Long v.

Shelter Mut. Ins. Co., 351 S.W.3d 692 (Mo. Ct. App. W.D. 2011) and Chamness v Am. Family Mut. Ins. Co., 226 S.W.3d 199 (Mo. Ct. App. E.D. 2007), the courts found that

the insured would be allowed to stack multiple insurance policies, because the


stacking provisions, when read in context with the other policy provisions, created an ambiguity that was construed in favor of coverage for the insureds.9

A word of caution at this point should be given. In cases involving insurance policies, each case will turn upon the specific language contained within the policy. Often courts will distinguish cases based upon one word or phrase that appears in one policy but not another. Therefore it is imperative that each case be analyzed to determine whether or not the language in the insurance policy in your case is similar to or distinguishable from the language in other underinsured motorist cases. For example, in 2012, Riley & Dunlap recovered full underinsured motorist coverage because, after an insurer denied any liability, the policy language was different than the cases on which it relied.


In many policies, the insurer will attempt to limit the amount it pays the insured by purporting to set-off that amount by any other amounts received by the insured. For example, if a victim of an automobile accident received $25,000 from the other driver’s insurance company but was able to assert a claim under the victim’s own underinsurance coverage, the insurer may claim that any money paid will be reduced by the $25,000 received from the other driver’s. Unfortunately, this too often results in the insured receiving no money from its own insurance company because the limits of its own insurance are equal or less than the amount of money received from another insurance company. Yet, just as ambiguity in an insurance policy will allow the insured to stack coverages, an ambiguity in the set-off provisions may also allow for full recovery. For instance, in Jones v. Mid-Century Ins. Co., 287 S.W.3d 687 (Mo. banc 2009) and Ritchie

v. Allied Property & Cas. Ins. Co., 307 S.W.3d 132 (Mo. banc 2009), the Missouri

Supreme Court found that the set-off language in the insurance policies to be ambiguous. In those cases, the Court noted that under the insurance company’s interpretation of the policy language, they would never be required to pay the full amount of their obligations, which conflicts with the policy’s coverage provisions.

As with stacking underinsured motorist coverage, each insurance policy may contain slightly different language, which may lead to a different result. Carefully analyze each policy and the applicable case law to determine the effect of the policy language.


Another area of insurance law that creates opportunities for successful litigation is with respect to insurance limits. An insurer can, of course, issue a policy with a total amount of coverage (say, for example, $300,000.00), but then limit the amount that would actually be payable in some specific circumstances (for example, only $100,000.00 for each person injured in an accident). These and other types of limits allow insurers, in some cases, to pay out less in insurance benefits than what an insured might expect from reviewing the insurance declaration page.

9 See also Niswonger v. Farm Bureau Town & Country Ins. Co. of Missouri, 992 S.W.2d 308 (Mo. Ct.


Generally, insurance limits are enforceable. If an insurance company has an unambiguous provision that reduces or limits the amount the insurer would pay beyond the total coverage, the reduction or limitation is enforceable. Yet, there are situations in which an insurance company has asserted that a policy provision reduced its liability even though courts subsequently agreed with the insured or injured parties that more money was due.

One of the most common sources of disputes with respect to the applicability of insurance limits arises in addressing “loss of consortium” claims. Generally, a loss of consortium claim is a claim that a spouse or child may have when that person’s spouse or parent suffers bodily injuries. When, for example, a husband is injured in an automobile accident, his wife also suffers damages due to loss of services, companionship, increased work, etc. These claims are compensable under Missouri law.

Even though these claims are compensable, many husbands or wives are denied payment for their loss of consortium claims due to their spouse’s injury because insurance companies claim that they only have to pay one “per person” limit because only one spouse suffered a bodily injury. So, if the husband directly involved in the accident suffered serious bodily harm, and even if the other driver was insured with a policy that provided $100,000.00 per person and $300,000.00 per accident coverage, the insurance coverage would pay only $100,000.00 for the husband’s injuries and no additional money for the wife. Missouri courts have held that these limitation provisions are enforceable if properly drafted.10

Injured parties must know, however, that many of these provisions are not properly drafted and may allow a couple to recover twice the amount offered by the insurance company. If an insurer drafted a limitation provision so that each per-person limit applied for each person “damaged” rather than “suffering bodily injury” then courts have held that each spouse is allowed to recover up to that limit amount.11 Similarly, if the policy’s definition of “bodily injury” would include loss of consortium damages, then additional recovery is again available.12 While this is only the most common ambiguity that allows injured parties to avoid limitation provisions, many others may exist. For example, Riley & Dunlap is litigating such a case at the time of this article based on the definition of “damages” in the insurance policy.


Excess insurance and umbrella insurance is insurance a party obtains to cover claims that would exceed the value of a primary policy. Excess insurance policies generally increase the amount of coverage but not the scope of coverage. An umbrella policy typically insures against certain risks that the primary policy does not cover; it provides primary coverage for certain covered losses and in this way it is a “gap filler” policy. These types

10 Ward v. Am. Family Ins. Co., 783 S.W.2d 921 (Mo. Ct. App. E.D. 1989). 11 Cano v. Travelers Ins. Co., 656 S.W.2d 266 (Mo. banc 1983).


of insurance policies might provide coverage provisions that differ from the primary policy, being either narrower or broader that the primary policy, or they may cover exactly the same claims, but only to the extent the claim exceeds the limits of the primary insurance, thus being a “follow-the-first” type of policy. Similar to primary liability insurers, excess and umbrella insurers typically require the insured to provide timely notice of a loss. Excess insurers often do not have the same obligations to defend parties as the primary insurer, until the limits of the underlying coverage are exhausted. Umbrella insurers, on the other hand, have a duty to provide a defense where the policy provides primary coverage.

One issue that has arisen several times in Missouri cases is whether an excess insurer must pay for claims that exceed the value of the primary insurer’s limits if the injured parties settle with the primary insurer. An older Missouri case held that claimants could settle with the primary insurer so long as the excess insurer was credited with the full amount of the primary insurance.13 Insurers have repeatedly argued that their policies require “exhaustion” of the primary insurance, however, and consequently the excess insurer is liable only if the claimants actually receive the full value of primary insurance (which, of course, renders settlement with the primary insurer virtually impossible). In the recent case of Schmitz v. Great American, 337 S.W.3d 700 (Mo. banc 2011), however, Riley & Dunlap was able to persuade the Missouri Supreme Court that Great American’s excess insurance policy was written so that it did not even require exhaustion of the primary policy, and thus our client was able to both settle with the primary insurer and recover against the excess insurer.

This article only touches upon the very basics of excess and umbrella insurance. The issues in cases where excess or umbrella insurers are involved are numerous and should be carefully studied in each situation to determine the liability of each insurer.


While many consumers rely on insurance companies to recover compensation for accidents they have suffered, many other parties, especially businesses, rely on insurance companies to defend or indemnify them when faced with a claim. In these cases, it is vitally important not only that one force the insurance company to recognize its duty to indemnify or pay an insured claim, but also to recognize and perform its duty to defend the insured. In many cases, the claims brought against an insured party may ultimately prove to be valid, and, hence, will not require payment, but the insurer is still obligated to provide a defense to the claim.

Insured parties must recognize that the duty to defend is broader than the duty to indemnify.14 Consequently, even if an injured party brings an invalid or fabricated claim, the insured has still paid premiums for the benefit of the insurer paying for defense against the claim. The duty to defend is based on the allegations in the lawsuit, rather

13 Handleman v. U.S. Fidelity & Guar. Co., 18 S.W.2d 532 (Mo. App. St. Louis 1929).

14 McCormack Baron Mgmt. Services Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 170 (Mo.


than what might ultimately be proven. Moreover, Missouri law actually mandates that if a lawsuit includes any insured claims, then the insurer has a duty to defend, even if the suit also includes claims that are not insured.15 Therefore, if an insurance company refuses to defend, an insured party may feel vulnerable when, in fact, Missouri law provides many opportunities to hold the insurance company responsible.


One of the most common tactics for an insurance company to pursue is to begin a defense but “reserve its rights” to later disclaim coverage. This approach is extremely problematic for insured parties in that it allows an insurance company to defend a claim, but then ultimately deny any liability to pay the claimant if the defense fails. Allowing an insurer to provide a defense under a “reservation of rights,” therefore, is generally unwise.

Fortunately, Missouri law provides an effective deterrent to insurers attempting to provide a defense under a “reservation of rights.” Under Missouri law, an insured party is not obligated to accept the defense under a reservation of rights. Instead, the insured party can expressly reject the reservation of rights in which case the insurer must drop its reservation of rights and provide a complete defense or risk breaching its contract by refusing to defend.16 By forcing an insurance company to make such a decision, the insured party can greatly increase its protection by verifying the insurance company will stand behind its coverage obligations.

If, in response to an insured’s demand for defense without a reservation of rights, the insurer refuses to drop its reservation and defend, then it will be deemed to have breached its contract if its coverage determination is incorrect. If the insurer just refuses to defend without reservation, the insured may immediately sue the insurer for breaching its contract; more significantly, perhaps, an insurer’s breach of contract frees the insured party to reach a settlement or otherwise dispose of its case in its best interest thereby allowing the claimant to go directly after the insurance company. In some cases, the insured party may even have a claim for additional damages against the insurance company, as discussed below. In all these cases, however, it is imperative to make the right interpretation of the insurance policy (i.e., be sure that the policy actual does provide coverage) and to have proceeded correctly in dealing with the insurer to protect one’s self and to maximize the chance of a recovery of damages.

Sometimes insurance companies will assert a reservation of rights and then, even after an insured defendant demands that the reservation be dropped, the insurer continues to defend without ever expressly dropping its reservation. It appears insurers hope the insured will simply acquiesce and continue to accept a defense without forcing the insurer to make a final determination. In 2013, Riley & Dunlap is currently negotiating with an insurer that has followed this approach; while the insured enjoys a “free” defense

15 McCormack Baron Mgmt. Services Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 170 (Mo.

banc 1999)


of the claims against him, one should build the case that coverage exists and be aware of this tactic.

In all cases it is as important for an insured defendant as it is for an insured claimant to read and interpret their policy for themselves with proper and informed representation.


One of the most potent protections under Missouri law is provided in Section 537.065, RSMo. This statutory provision allows a party being sued (the defendant) to reach an agreement with the claimant (or plaintiff) by which the plaintiff agrees that if a judgment is obtained against the defendant, then the claimant will attempt to collect that judgment only against any specified assets, like insurance. This statute has been interpreted by the courts to allow the defendant, who is insured by an insurance company that refuses to defend, to enter into what is called a “537.065 Agreement” and then simply take no other action while the plaintiff proceeds to a trial or other hearing to obtain a judgment against them; if a judgment is, then, obtained, the plaintiff proceeds directly against the insurance company and the defendant does not have to pay for its defense and is at no risk of having to pay the judgment. This statute allows the plaintiff to take the risk of whether insurance exists, while protecting the defendant. Moreover, as discussed below, the insured party may even have the opportunity to collect additional damages against the insurance company if it is determined that the insurer denied its defense obligations in bad faith.17 If the insurer was correct and no insurance exists for the plaintiff’s claims, then the plaintiff simply cannot recover from the insurer (and the defendant is still protected).

537.065 agreements are under constant attack by insurance companies and are quite complicated processes. Nevertheless, the presence of Section 537.065 provides significant protections for insured parties and significant opportunities for injured parties if an insurance company does not defend a case as it is required to do. As such, the 537.065 agreement is a tool that should be the toolbox of any litigator pursuing insured claims.


As mentioned above, if the insurance company refuses to defend its insured without reservation or otherwise conducts its investigation or coverage decision in bad faith, the insured may be able to recover damages from the insurance company in excess of the policy limits. These “extra-contractual damages” may be recovered for a liability insurer’s refusal to defend its insured against a claim by a third party (i.e., breach of a duty to defend); the bad faith failure of a liability insurer to settle a claim with a third-party within policy limits thereby resulting in a judgment against the insured in excess of the policy limits (i.e., bad faith refusal to settle); or a wrongful denial by an insurer of a

17 In the most recent Missouri Supreme Court Case regarding 537.065 agreements, the Missouri Supreme


first-party claim (i.e., vexatious refusal to pay a claim). The first and second situations above involve third-party claims while the third situation involves a first-party claim. A third-party claim is a liability claim made by an injured party against the insured to compensate the injured party for a loss due to the insured’s liability. A first-party claim is a claim made by the insured to its own insurance company to recover proceeds of the insurance policy for a covered loss. In each situation, the insured is the individual to whom the action accrues. The insurer’s duty to defend is addressed above; thus, this section will address bad faith refusal to settle and vexatious refusal to pay.


In a situation where in insurance company refuses to defend its insured, the insurance company may be liable for breach of contract and all damages proximately caused by the breach. Those damages could include damages incurred by an insured when an insurer refused, in bad faith, to settle a claim with a third party within policy limits when it was under a contractual obligation to do so. Courts have determined that when insurers expose their insured to a judgment in excess of the policy limits in this manner, then the insurer will be liable for all those damages to which the insured was exposed.18

Bad faith on the insurer’s part may be shown by direct or circumstantial evidence and courts have found that certain factors are evidence of bad faith: failure to fully investigate a third party’s claim, failure to recognize the severity of the claimant’s injuries, failing to recognize that a verdict against the insured might exceed policy limits, failure to keep the insured informed of settlement offers, ignoring settlement advice or rejecting advice by the company’s own agents or counsel, failing to affirmatively seek a settlement or resolution of the claim; limiting an investigation to the question of coverage; standing on a denial of coverage without considering the interest of the insured; and failing to give good faith consideration to a settlement despite a coverage dispute. For example, in

Shobe v. Kelly, 729 S.W.3d 203 (Mo. Ct. App. W.D. 2009), the insurance company

erroneously denied coverage to its insured and was found to have acted in bad faith in refusing to settle the insured’s claim because the insurer not only interpreted its policy incorrectly but also limited its investigation to the question of whether or not the policy covered the third party’s claim and failed to consider the insured’s interest.

Since the resolution of each case turns upon the facts specific to that case, insureds should carefully contemplate whether or not they might be able to assert a bad faith refusal to settle case. While it will not be available in every case, it is an issue to be aware of in dealing with insurance companies.


In Missouri, a bad faith refusal to settle claim belongs to the insured, not the third-party claimant. Nevertheless, an insured’s bad faith refusal to settle claim against the insurer is assignable.19 However, this contention has received some criticism in the state courts.20

18 Johnson v. Allstate Ins. Co., 262 S.W.3d 655 (Mo. Ct. App. W.D. 2008).

19 Ganaway v. Shelter Mut. Ins. Co, 795 S.W.2d 554, 565 (Mo. Ct. App. S.D. 1990).


These courts are joined by other commentators who suggest that since the law on assignability of a bad faith refusal to settle claim is unsettled, the insured and the third-party claimant could agree that the insured will pursue a bad faith refusal to settle claim against the insurance company, and then either have the insured assign the judgment to the third-party claimant or pay the proceeds to the claimant pursuant to an agreement. This option then allows both parties to skirt the assignability problems that might arise. In the federal court system, a bad faith refusal to settle claim is not assignable.21


Similar to bad faith refusal to settle is the statutory cause of action for vexatious refusal to pay. Four Missouri statutes provide for recovery of damages and attorney’s fees if an insurer unreasonably refuses to pay or unreasonably delays paying a loss. Sections 357.335, 375.296, 375.420, and 378.330, RSMo. The two statutes in Chapter 375 will be the focus of this analysis. Section 375.420 contains language covering a broad range of insurance types, including fire, life, health, accident and even a catch-all for “other insurance.” However, automobile liability policies are explicitly excluded from the provisions of the statute.

The standard for determining whether or not an insurance company acted unreasonably when it failed to pay a claim is whether a reasonable and prudent person would find the conduct of the insurer reasonable or unreasonable up to the time it was asked to pay and refused to do so.22 Thus an insurance company who presents a legitimate issue regarding coverage under the insurance policy or their duty to pay will not be liable for their refusal to pay unless the insured can present evidence that the insurance company acted unreasonably. Moreover, an insured cannot recover from the insurance company more than that to which he or she is entitled.

As with bad faith refusal to settle, each case’s resolution will be dependent upon the specific facts of the situation, including the wording of the insurance policy. Thus it is important to understand the insurance policy’s language regarding coverage and when the insurer’s duty to pay a loss arises.


Insurance is not only a factor in recovery compensation for injuries, it is also a normal cost of doing business. Whether you are brining or defending a claim, you must take responsibility for yourself to verify you are receiving the benefits from an insurance company to which you are entitled. Due to the complexity of insurance policies and the number of legal doctrines that affect their interpretation, you should always have

effective legal representation when negotiation with an insurance company.

21 Quick v. Nat’l Auto Credit, 65 F.3d 741 (8th Cir. 1995).

22 Boatmans’s First Nat. Bank of Kansas City v. Hawkeye-Security Ins. Co., 861 S.W.2d 600, 603 (Mo. Ct.


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