In another encroachment on plaintiff’s rights and a boon to insurance companies, a new version of Missouri House Bill 339, signed by Gov. Greitens in July, goes into effect Aug. 28. This bill gives insurance companies additional rights in cases they declined to defend or provide coverage on.
When an insurer refuses to defend their insured or indicates that their policy will not cover damages, the law allows the defendant to drop their insurance-provided lawyer. In that case, a plaintiff may set a bench trial (in front of a judge but not a jury), with no lawyer representing the defense. The plaintiff must present their case as they would in any other trial, and the judge renders a decision. Obviously with no one there to represent the defendant, the amount awarded to the injured party can be quite large.
If the judge grants the plaintiff an award, the plaintiff must then start new litigation in order to collect the judgment—this time against the defendant’s insurance company. The injured party must prove the defendant’s insurance company is contractually bound to cover the judgment rendered against its insured.
In the past, once an insurer declined to represent its client, it lost its say in a case. The rationale was that, if the insurer gives up the chance to defend their insured and abandons them, it can’t complain about the outcome.
House Bill 339 gives insurers the right to intervene in a case in which they previously declined to represent their insured, as long as they give 30 days’ notice.
What it means to give insurers “the right to intervene” is still being debated, but this change clearly reduces the downside risk to the insurance company of denying coverage.
Adler & Manson is keeping up with these sweeping changes and we will be prepared to represent clients who are potentially impacted by them. Find out how your Missouri legislators voted on this bill here.