R.S.Mo. §537.065 agreements when Missouri insurance carriers act in bad faith

What is a R.S.Mo. §537.065 agreement?

A 537.065 agreement is an excellent method for an insurance customer (“insured”) to protect themselves from a judgment in excess of the limits of their policy and for a claimant/plaintiff to potentially collect a judgment in excess of the limits of the defendant’s insurance policy.  

In a typical 537.065 agreement the claimant agrees to execute on only certain assets, which can include any claims against “any insurer which insures the legal liability of the tortfeasor”.  R.S.Mo. 537.065.  (A tortfeasor is a person who negligently or intentionally injures another).

What is an example of a R.S.Mo. §537.065 agreement?

R.S.Mo. §537.065 is the result of a Missouri state senator being involved in a case where an insurance carrier (Farm Bureau) was attempting to avoid its duties under Missouri law.  Farmers Mutual Automobile Ins. Co. v. Drane, 383 S.W.2d 714 (Mo. Banc 1964).  The case resulted from a person being injured in a hay hauling accident.  There were two insurance carriers with policies that applied to this farm accident.  One insurer accepted its coverage obligation, but Farm Bureau refused coverage.  The Missouri state senator introduced a bill to allow an insured and a claimant to enter into an agreement to limit recovery to claims against the insurer, or other assets. The parties then used this law, R.S.Mo. §537.065 in the case.  Instead of admitting defeat, Farmers, the insurer, attempted to fight the law.  

How do R.S.Mo. §537.065 agreements work in practice?

When applied to real world personal injury and wrongful death cases in Missouri, 537.065 agreements are an excellent tool to maximize the value of a personal injury or wrongful death case.  537.065 agreements can also be used as a great tool to force a settlement when an insurance carrier is not properly protecting their customer, the insured’s interests.   

R.S.Mo. §537.065 agreements can be written in a number of ways that allow the insured to protect specific (or all) of their assets.  They can also contemplate a “delayed prosecution” agreement where the parties agree that the claimant will first attempt to collect against the insurance carrier, and if that fails, then will again proceed against the insured.