Insurance Company Denials or Vexatious Refusal to Pay
Insurance companies often deny claims by their insureds even though the claims are legitimate. Call it good business or merely hardball adjusting, insurance companies would rather keep your money than pay it back out. Denied insurance claims can be frustrating and confusing for any claimant without legal representation. But when claims are denied, Missouri law gives the insured a right to bring a claim for vexatious refusal to pay against their insurance company if they believe their claim has been wrongly denied.
In addition to recovering the amount wrongly denied, a policy owner may recover his/her reasonable attorney fees, a penalty of up 20% of the first $1,500 of the loss and 10% of any additional amounts. To that end, abusive or overly aggressive insurance claims adjusters can leave their company exposed to vexatious refusal law suits.
Frequently, real property claim denials occur in fire claims where there is evidence of arson and on claims where the claimant is entitled to replacement cost of the damaged property only. In personal property claims, a high percentage of disputes arise when the policy covers only actual cash value and not replacement value. Unless the homeowner has purchased an endorsement to cover replacement cost, most policies only cover actual cash value. Actual cash value is the depreciated value of the damage.
Where the insurance policy provides for replacement cost coverage, the insurance company is obligated to pay the full cost to replace the damaged structures or property. The insurance company will estimate the damage and pay up front the depreciated value of the damage. They will, however, withhold what they call replacement cost hold back, or the difference between the replacement cost and the depreciated value. Once repairs are undertaken, the insurance company is then obligated to pay the depreciation and bring their full payment up to the replacement cost value.
Arson denial cases will involve a cause and origin expert to assist in the investigation of arson. The claimant may also need an appraisal expert to assist them in calculating both the personal property loss and the loss to any real property. The expertise of these experts and an attorney experienced in vexatious refusal claims may help you make your rightful recovery against your insurance company.