Section 4 Statutory Basis for Vexatious Penalties

• Library: Damages 2012

Vexatious penalties flow from the following statutes:

· Section 375.420, RSMo 2000. This section is the most frequently used of the vexatious penalty statutes. It 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; and the court shall enter judgment for the aggregate sum found in the verdict.

Under § 380.031, RSMo 2000, Missouri mutual insurance companies are exempted from the provisions of § 375.420. See also Schmidt v. Cent. Mut. Ins. Ass’n, 153 S.W.2d 99, 105 (Mo. App. W.D. 1941).

It has been held that the exclusion, under the statute, of “automobile liability insurance” does not prevent recovery of vexatious penalties for claims under uninsured motorist coverage. Shafer v. Auto. Club Inter-Ins. Exch., 778 S.W.2d 395, 398 (Mo. App. S.D. 1989); Thomas v. Am. Cas. Ins. Co., 871 S.W.2d 460, 462 (Mo. App. W.D...