Missouri vexatious refusal law · Guide
Missouri vexatious refusal law: the penalty for refusing to pay without reasonable cause
Missouri’s vexatious refusal law lets a court add a penalty and a reasonable attorney’s fee when your insurer refuses to pay a claim without reasonable cause. You must first demand payment and wait 30 days. The penalty is up to 20 percent of the first $1,500 of the loss and 10 percent of the rest.
What “vexatious refusal” means
“Vexatious” is an old word. Here it means refusing to pay without a good reason. The law asks whether the insurer refused “without reasonable cause or excuse” (RSMo 375.420).
That is a real limit. An insurer can lose a coverage dispute and still not owe the penalty. If it had a reasonable question about the facts or the policy, its refusal may not be vexatious. The penalty is for refusals that had no fair basis.
This law is Missouri’s main tool when your own insurer will not pay your own claim. Missouri does not generally allow a separate “bad faith” lawsuit for that refusal alone. See insurance bad faith and coverage disputes for how that works, and for claims when an insurer will not settle a lawsuit against you.
The two statutes
RSMO 375.296: WHEN THE CLAIM CAN BE MADE
- It covers suits on insurance contracts issued or delivered in Missouri to a Missouri resident, or to a company formed in or allowed to do business in Missouri.
- You must make a demand for payment. The insurer must then fail or refuse to pay for 30 days before you sue.
- The evidence must show the refusal was vexatious and without reasonable cause.
RSMO 375.420: WHAT THE COURT CAN ADD
- The amount owed under the policy, plus interest.
- A penalty of up to 20 percent of the first $1,500 of the loss.
- Plus up to 10 percent of the loss above $1,500.
- Plus a reasonable attorney’s fee.
30 days
The time an insurer has after your demand for payment before a suit can seek the vexatious refusal penalty. Source: RSMo 375.296.
Which policies it covers
The penalty law reaches most kinds of insurance. That includes property, fire, life, health, accident and theft policies. It covers your homeowner, renter, business property and car physical damage claims.
It does not apply to automobile liability insurance (RSMo 375.420). That is the part of a car policy that pays other people when you cause a crash. So if another driver’s insurer will not pay you, this penalty is not the tool. See car accident claims. Your own uninsured motorist claim is a claim on your own policy.
How to make the demand
The statute requires a demand for payment before suit. Make it clear and make it provable.
- Put it in writing. Address it to the insurer, and send a copy to the adjuster.
- Name the policy number, claim number and date of loss.
- Say what you are owed, and how you got that number. Attach your estimates.
- Ask for payment.
- Send it in a way you can prove, such as certified mail with a return receipt, and keep a copy.
- Mark your calendar for 30 days later.
A lawyer can write the demand so it lines up with the lawsuit that may follow. That is often worth doing.
What the penalty law does not do
- It does not decide coverage. The first question is still whether the policy owes the money.
- It does not punish honest disputes. A reasonable reason to question the claim is a defense.
- It does not cover automobile liability insurance.
- It does not replace the time limit to sue. That is a separate question.
Missouri’s claim-handling rules are also separate. The Unfair Claims Settlement Practices Act lists improper practices, like denying claims without a reasonable investigation (RSMo 375.1007). But it says it does not create a private right to sue (RSMo 375.1000). The state enforces it.
Your other paths: a state complaint and appraisal
You can file a complaint with the Missouri Department of Commerce and Insurance online, by mail, by fax, or through the Insurance Consumer Hotline at 800-726-7390. The Department can require the insurer to respond and review that response under Missouri law. It cannot act as your lawyer or decide how much you are owed.
If the fight is only about the amount, your policy may have an appraisal clause. Appraisal and a vexatious refusal claim can both matter in the same case.
How long you have to sue
A suit on a contract in Missouri generally must be filed within five years (RSMo 516.120). Some suits on a written promise to pay money or property have ten years (RSMo 516.110). Which applies, and when the clock starts, depends on your facts.
Your policy may say you must sue sooner. Missouri law says contract terms that limit the time to sue are void (RSMo 431.030). A lawyer should check how that applies to your policy.
If you have no lawyer, Missouri rules require your insurer to warn you in writing 30 days before a policy or legal time limit may run out on your claim (20 CSR 100-1.050).
What to do now
- Keep every letter, email and estimate. Log every call.
- Get your full policy with the declarations page.
- Photograph the damage and keep damaged items until they are documented.
- Get your own estimates.
- Do not cash a check marked “final” without advice.
- Make a written demand for what is owed, and wait 30 days.
Harjot Singh Padda, JD can review your claim, write the demand and explain whether a suit on the policy makes sense.
Common questions
Is vexatious refusal the same as bad faith?
Not exactly. It is a penalty added to a suit on your own policy. See insurance bad faith and coverage disputes.
Do I need to send a demand letter first?
Yes. The statute requires a demand and 30 days before suit. See breach of contract claims.
Does the penalty apply to underpaid claims?
It can, if the insurer refused to pay what the policy owes without reasonable cause. See underpaid insurance claims.
Does it apply to a claim against another driver’s insurer?
No. It excludes automobile liability insurance. See talking to insurance adjusters.
Can I get my attorney’s fees back?
The court can award a reasonable attorney’s fee if the refusal was vexatious. See civil litigation.
Related reading
- Property insurance claims overview
- Insurance bad faith and coverage disputes
- Denied insurance claims
- Civil litigation in St. Louis
- Breach of contract claims
Sources
- Mo. Rev. Stat. § 375.296 (written demand; 30 days before suit; vexatious refusal to pay). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 375.420 (penalty of 20 percent of the first $1,500 of the loss and 10 percent of the rest, plus a reasonable attorney’s fee; automobile liability insurance excluded). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 375.1000 (Unfair Claims Settlement Practices Act; no private cause of action). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 375.1007 (improper claims practices). Missouri Revisor of Statutes
- Missouri Department of Commerce and Insurance, Insurance Complaints (how to file; what the Department can and cannot do). Missouri Department of Commerce and Insurance
- Mo. Rev. Stat. § 516.120 (five years for actions on contracts). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 516.110 (ten years for an action on a writing for the payment of money or property). Missouri Revisor of Statutes
- Mo. Rev. Stat. § 431.030 (contract terms that limit the time to sue are void). Missouri Revisor of Statutes
- 20 CSR 100-1.050 (15 working days to accept or deny after all forms are in; written denial citing the policy provision; 45-day status letters; 30-day investigation standard; auto estimates and itemized depreciation). Missouri Secretary of State, Code of State Regulations