Recent statutory changes have substantially curbed bad faith and excess set up activities and tactics in Missouri. However, there are always new tricks and tactics employed and this often occurs on a broad scale with the sharing of forms and strategies among the Plaintiffs bar throughout the state. Over the past few years, those tricks and tactics have focused in part on importing to an insurer requirements to settle other than simply paying its policy limits to effectuate a settlement on behalf of its insured. Specifically, recent policy limit demands have required that (1) proof of no other insurance; (2) pre-suit recorded statements from insured(s); (3) production of claim file investigative materials, e.g., photos and recorded statements, etc. While an insurer often controls settlement decisions under standard auto and liability policies issued throughout Missouri and Kansas and in many cases the insurer may desire to pay its limits in response to such a request, these new additional requests actually involve decisions that must be made by an insured and often require consultation and advice of counsel for the insured.
Specifically, the decision to provide a pre-suit statement is a decision that should be made by the insured in conjunction with defense counsel. Such decisions are obviously fact sensitive and can be impacted by numerous factors applicable to any given claim. For instance, if liability is clearly against the insured, the exposure is significant and there exists insufficient insurance to protect the insured, then the insured may be motivated to provide the statement in order to meet the demand head on and to avoid a scenario where the insured rejects a demand that may not be offered again in the future. On the other hand, if there exists significant amounts of insurance and a disputed issue of liability, then the insured may in full disclosure elect to decline such a pre-suit statement as the statement may be used against the insured in future litigation in which the disputed issues of liability and damages are decided. Other factors must also be considered, for instance, under either scenario, if an insured is or is likely to face criminal charges for the event in question, then criminal defense counsel may need to be engaged or coordinated with in order to allow the insured to make a fully informed decision, especially when weighing whether the danger of a criminal conviction outweighs the danger of a civil verdict.
Similar concerns apply to request for claim file materials. Under Missouri law, the claim file materials are typically protected from disclosure under the attorney-client and work-product protections, depending on the facts and circumstances surrounding the claim progression. Under Missouri law, the claim file is unquestionably the property of the insured and as such, just like with the decision to allow or decline a request for a pre-suit statement, the decision on whether to produce claim file investigative materials is a decision that should be made by an insured after consultation with defense counsel. While such materials may be protected from disclosure, if the intention is to accept a policy limit demand where only limited policy funds exist for a claim of clear liability and catastrophic damages, then production of such materials may make sense in order to avoid rejecting a demand and to secure a release where it remains possible to do so. However, there are other scenarios where production may not make sense depending on the facts and circumstances of the claim at issue.
As outlined herein, while these more recent requests involve items that are largely outside the control of the insurer in deciding to accept or reject a demand, they clearly require timely and adequate communication with the insured so that the insured can make an informed decision as to how to respond to a demand in any given case. As these decisions involve questions of legal strategy, promptly retaining competent and independent defense counsel to advise the insured is recommended despite the fact that litigation may not have yet been filed against the insured. If an insurer does this and the insured makes a fully informed decision understanding the risks and pitfalls of any decision made, then the insurer is unlikely to face additional exposure associated with the insured’s decision as to the course of action taken.
There is limited case law directly on point, however, this particular current trend was recently assessed by the United States District Court for the District of Kansas in the case of Shelter Mutual Insurance Company v. McGuyer, 2025 WL 2645178 (D. Kan. 2025). There, a claim for bad faith was pursued against an auto-liability carrier that in response to a similar pre-suit request, referred the claimant’s counsel to the insured’s personal counsel so that the insured and the insured’s personal counsel would make the decision as to whether or not to provide the requested statement. The insured’s personal counsel thereafter requested that the insurer pay for a translator and court reporter to complete the recorded statement and the insurer declined this request. No recorded statement was ever taken and the matter proceeded to litigation where a $1.5 million judgment was entered against the insured. The ultimately issue before the District Court was whether the insurer was responsible for paying the judgment in excess of the $100,000.00 policy limit which had been tendered before the request for statement was even asserted in the matter.
The McGuyer court ultimately concluded that on the facts of that specific case (1) no reasonable jury could conclude that the insurer breached its implied duties of reasonable care and good faith; and (2) no reasonable jury could conclude that the insurer’s conduct caused the claim not to be settled prior to the entry of the judgment at issue. As such, judgment was entered for the insurer and against the claimants in the case.
In sum, timely and adequate communication is key to ensuring that the insured is provided the necessary information and advice in making an informed decision in assisting the insurer in responding to a pre-suit policy limits demand. Where an insurer assists the insured in making these critical decisions as discussed herein and as tailored to any specific factual scenario that may occur, then an insurer in both Missouri and Kansas is unlikely to face excess exposure for decisions that are ultimately made by the insured.