In Easter v. Farmers Insurance Company, Inc., 2014 U.S. Dist. LEXIS 39950 (W.D. Mo. March 26, 2014), the court analyzed an uninsured motorist coverage claim. Davina Easter was involved in an automobile accident when the car she was following stopped abruptly. Easter crashed into the stopped car and was injured. Easter was insured by Farmers Insurance Company (“Farmers”). Easter demanded payment for her injuries through her uninsured motorist coverage, and Farmers denied the claim.
Easter filed suit against Farmers, with causes of action for payment of the uninsured motorist coverage, vexatious refusal to pay under Mo. Rev. Stat. § 375.420, and breach of the duty of good faith and fair dealing. Farmers moved to dismiss the cause of action for the breach of the duty of good faith and fair dealing.
The Missouri federal court cited Missouri Supreme Court precedent in its finding that no tort claim has supplanted or supplemented the basic contract claim and remedy where an insurance company wrongfully refuses to pay a loss incurred by its own insured. The court followed the Missouri Supreme Court’s decision in Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62 (Mo. 2000), in which the court noted that bad faith by an insurer with respect to third party policies may expose an insured to liability in excess of the policy limits. In first party disputes, the claim is by the insured against the insurance company for the policy benefit only. Id.
Thus, the court dismissed Easter’s cause of action for breach of the duty of good faith and fair dealing. In first party actions in Missouri, Mo. Rev. Stat. § 375.420 provides the only additional remedy beyond contract damages. That statute provides:
In any action against any insurance company to recover the amount of any loss under a policy of automobile, fire, cyclone, lightning, life, health, accident, employers’ liability, burglary, theft, embezzlement, fidelity, indemnity, marine or other insurance except automobile liability insurance, if it appears from the evidence that such company has refused to pay such loss without reasonable cause or excuse, the court or jury may, in addition to the amount thereof and interest, allow the plaintiff damages not to exceed twenty percent of the first fifteen hundred dollars of the loss, and ten percent of the amount of the loss in excess of fifteen hundred dollars and a reasonable attorney’s fee.
Thus, where an insurer refuses to pay an insured without reasonable cause or excuse, an insurer may be liable for 20% of the first $1,500 of the loss, 10% of the amount in excess of $1,500, and a reasonable attorney’s fee. This is the limit of additional liability of an insurer in the first party context in Missouri. The Easter court noted that § 375.420 aims to make the insured whole where litigation is necessary and to provide an incentive for insurance companies to pay legitimate claims without litigation. Any tort claims brought by an insured against an insurance company in the first party context are prohibited under Missouri law.