Section 14.20 Section 375.420, RSMo

• Library: Insurance Practice 2015

Section 375.420, RSMo 2000, applies to policies of automobile (other than liability), fire, cyclone, lightning, life, health, accident, employer’s liability, burglary, theft, embezzlement, fidelity, indemnity, marine, or other insurance. It should be noted that uninsured motorist coverage is not automobile liability insurance and thus is not an exception to § 375.420. Shafer v. Auto. Club Inter-Ins. Exch., 778 S.W.2d 395, 398 (Mo. App. S.D. 1989), reh’g, transfer denied. The elements under this statute are as follows:

· The action must be instituted by an insured.

· The action must be against an insurer.

· The action must be based on automobile (other than liability), fire, cyclone, lightning, life, health, accident, employers’ liability, burglary, theft, embezzlement, fidelity, indemnity, marine, or other insurance contracts.

· The insured must have suffered a loss.

· The insurer must have refused to pay the loss.

· It must appear from the evidence that the insurer refused to pay without reasonable cause or excuse.

Certain types of companies are excluded. County, town, and farmers’ mutual property insurance companies organized under Chapter 380, RSMo, are exempt from the provisions of both of the foregoing statutes. See § 380.031, RSMo 2000; Catron v. Columbia Mut. Ins. Co., 723 S.W.2d 5, 6 (Mo. banc 1987); Duncan v. Andrew County Mut. Ins. Co., 665 S.W.2d 13, 20 (Mo. App. W.D. 1983). Two statutory penalties are allowed. They are (1) 20% of the first $1,500 of the proven loss and 10% of the proven loss above that amount and (2) a reasonable attorney fee.

The underlying reason for this section is to save or shift the expense that was preliminary and necessary to secure payment of a loss under the policy when failure of payment was because of recalcitrance of the insurer. Willis v. Am. Nat’l Life Ins. Co., 287 S.W.2d 98, 107-08 (Mo. App. S.D. 1956). This section was also enacted to correct the evil of an arbitrary refusal solely to delay a plaintiff in collection of a claim. Bouligny v. Metro. Life Ins. Co., 179 S.W.2d 109, 112 (Mo. App. E.D. 1944). This section pre-empts a claim for tortious interference with the insured’s business. Halford v. Am. Preferred Ins., 698 S.W.2d 40 (Mo. App. E.D. 1985). It does not, however, preempt a claim for defamation. Overcast v. Billings Mut. Ins. Co., 11 S.W.3d 62 (Mo. banc 2000). This section, like § 375.296, RSMo 1994, is highly penal and must be strictly construed. Columbia Union Nat’l Bank v. Hartford Accident &...