Insurer Bad Faith and Fee Statutes: MO, KS, OK, AR, TX, CO

Q: How long does an Oklahoma insurer have to make a written offer under 36 O.S. § 3629(B)?

Sixty days after receiving the proof of loss. Under Hamilton v. Northfield Insurance Co., 2020 OK 28, only timely offers to settle the underlying claim count in deciding who is the prevailing party.

Q: Does late payment defeat a Missouri vexatious refusal claim or reduce a Colorado statutory award?

No. Under Dhyne in Missouri, payment before trial does not defeat the claim, and under Barriga in Colorado, an amount delayed but eventually paid still counts toward the two times covered benefit award.

They govern whether fees shift, whether a percentage penalty applies, whether a tort claim is available, and what an insurer can do early to limit exposure. These rules vary considerably among the six states covered here.

Key points

Missouri and Colorado: paying late does not erase exposure.
Kansas: no first-party bad faith tort, but K.S.A. 40-908 fees on fire, tornado, lightning and hail policies require no showing of bad faith.
Oklahoma: fees run both ways, and only a timely written offer on the claim counts.
Arkansas and Texas: the amount demanded can decide whether a penalty or fee is available.

Six state comparison

State	First-party bad faith tort	Statutory penalty	Attorney’s fees	Key trigger or limit
Missouri	Statute is the primary remedy ¹	Up to 20% of the first $1,500 of loss and 10% of the remainder ¹	Reasonable fee on a vexatious refusal finding ¹	Refusal without reasonable cause; payment before trial does not cure ^2,3
Kansas	Not recognized ⁴	None	K.S.A. 40-256 for refusal without just cause or excuse ⁵; K.S.A. 40-908 on fire, tornado, lightning or hail policies ⁶	A pre-suit tender equal to or above the judgment bars 40-908 fees ⁶
Oklahoma	Recognized ⁷	None by statute	Prevailing party fees in either direction ⁸	Written offer or rejection within 60 days of proof of loss; insurer prevails only if the judgment does not exceed its written offer ^8,9
Arkansas	Recognized for dishonest, malicious or oppressive conduct ¹⁰	12% of the loss ¹¹	Reasonable fees with the penalty ¹¹	Recovery must be within 20% of the amount demanded ¹²
Texas	Recognized at common law ¹³	Chapter 542 interest: 18%, or for weather claims the judgment rate plus 5% ¹⁴	Allowed, limited by the Chapter 542A formula on weather claims ¹⁵	61 day presuit notice; no fees when the insurer pays the full appraisal award plus any statutory interest ^15,16
Colorado	Recognized ¹⁷	Two times the covered benefit ¹⁸	Reasonable fees and costs ¹⁸	Delay or denial without a reasonable basis; later payment does not reduce the award ¹⁹

How to read the authorities: every entry is state law, either a state statute or a decision of a state court, except the Eighth Circuit’s Academy Bank decision, which is a federal court applying Missouri law. Federal decisions applying state law are persuasive, not binding, in that state’s courts.

State notes

Missouri. The penalty is capped by formula, but the attorney’s fee is not, so the fee often drives the exposure ¹. Dhyne holds that paying before trial does not defeat the claim ². In Academy Bank, the Eighth Circuit affirmed a vexatious refusal award where the insurer delayed roughly a year and a half in paying even the undisputed portion of the claim; payment after appraisal did not cure the earlier delay ³.

Kansas. With no first-party bad faith tort ⁴, the dispute is over fees. K.S.A. 40-256 turns on whether the refusal had a reasonable basis ⁵. K.S.A. 40-908 applies to policies covering fire, tornado, lightning or hail and requires no showing of bad faith, but a tender made before suit that equals or exceeds the eventual judgment cuts it off ⁶.

Oklahoma. Oklahoma recognizes the tort, but Christian limits it to cases where the insurer unreasonably and in bad faith withholds payment; a legitimate dispute and resort to the courts is not bad faith by itself ⁷. Under 36 O.S. § 3629(B), the insurer must submit a written offer of settlement or rejection within 60 days of receiving the proof of loss, and the insurer is the prevailing party only where the judgment does not exceed its written offer ⁸. The Supreme Court of Oklahoma has held that only timely offers to settle the underlying claim count; an offer made to resolve the lawsuit does not ⁹.

Arkansas. The 12 percent penalty and fees under Ark. Code Ann. § 23-79-208 apply when the insurer fails to pay within the time the policy specifies after demand ¹¹, but only if the recovery is within 20 percent of the amount demanded or sought in the suit. The Supreme Court of Arkansas treats the provision as penal and construes it strictly ¹². The bad faith tort requires affirmative misconduct that is dishonest, malicious or oppressive; a good faith dispute over the amount owed does not qualify ¹⁰.

Texas. Two statutory tracks sit beside the common law duty of good faith ¹³. Chapter 542 adds interest to late paid claims, and for weather claims the rate is the judgment rate plus five percent rather than 18 percent ¹⁴. Chapter 542A requires presuit notice stating the amount owed at least 61 days before suit and limits fees by a formula tied to the ratio of the judgment to the amount demanded; if that ratio is below 0.2, no fees are awarded ¹⁵. In Rodriguez v. Safeco, the Supreme Court of Texas held that paying the full appraisal award plus any possible statutory interest forecloses attorney’s fees under Chapter 542A ¹⁶. For where appraisal itself stands in Texas and neighboring states, see the 2026 appraisal map.

Colorado. A first-party claimant whose benefits were unreasonably delayed or denied may recover two times the covered benefit plus reasonable attorney’s fees and costs ¹⁸. In Barriga, the Colorado Supreme Court held that the award is not reduced by an amount the insurer delayed but eventually paid ¹⁹. The common law bad faith tort remains available alongside the statute ¹⁷.

What this means on a file

For counsel representing policyholders

In Missouri and Colorado, exposure turns on the record of delay. Build the timeline of demand, inspection and payment from the first notice ^1,18.
In Arkansas and Texas, the amount demanded affects whether a penalty or fee is available, and an overstated demand can forfeit either one ^12,15.
In Kansas, confirm the policy’s covered perils before relying on K.S.A. 40-908 ⁶.

For counsel representing insurers

In Oklahoma, a written offer or rejection within 60 days of proof of loss is the principal way to preserve prevailing party fees ^8,9.
In Kansas, a well supported tender before suit can cut off 40-908 fees ⁶. In Texas, prompt payment of an appraisal award plus statutory interest can end fee exposure under Chapter 542A ¹⁶.
In Missouri and Colorado, paying late does not erase exposure ^2,19. Paying undisputed amounts early reduces it.

For both sides: each statute is applied to the facts in the claim file, including when notice arrived, what the adjuster knew, and when and why each payment issued.

Common questions

How long does an Oklahoma insurer have to make a written offer under 36 O.S. § 3629(B)?

Sixty days after receiving the proof of loss. Under Hamilton v. Northfield Insurance Co., 2020 OK 28, only timely offers to settle the underlying claim count in deciding who is the prevailing party.

Does paying an appraisal award end attorney’s fee exposure in Texas?

On claims governed by Chapter 542A, paying the full appraisal award plus any possible statutory interest forecloses attorney’s fees under that chapter, under Rodriguez v. Safeco (Tex. 2024).

Does late payment defeat a Missouri vexatious refusal claim or reduce a Colorado statutory award?

No. Under Dhyne in Missouri, payment before trial does not defeat the claim, and under Barriga in Colorado, an amount delayed but eventually paid still counts toward the two times covered benefit award.

Working with Okla Risk Advisors

Okla Risk Advisors is available to counsel representing policyholders or insurers, and to adjusting firms and public adjusters, in Missouri, Kansas, Oklahoma, Arkansas, Texas and Colorado:

To discuss a file or a question, email chrischambers@oklariskadvisors.com or use the contact page. The firm accepts engagements from either side of a dispute.

About the author

Chris Chambers is an Executive General Adjuster and the founder of Okla Risk Advisors. He has more than 25 years of catastrophe property and casualty experience and has deployed to many of the large-scale U.S. disasters since 2004. He holds an MLS in Indigenous Peoples Law from the University of Oklahoma, is a member of the Oklahoma Indian Bar Association, and is an enrolled citizen of the Choctaw Nation of Oklahoma. He holds NFIP certification at all four levels and FEMA IS-318.b certification.

This article is general information, not legal advice. Authorities are current as of October 21, 2026.

Sources

Mo. Rev. Stat. § 375.420. State statute
Dhyne v. State Farm Fire & Cas. Co., 188 S.W.3d 454, 457 (Mo. 2006) (en banc). State supreme court
Acad. Bank, N.A. v. AmGuard Ins. Co., 116 F.4th 768 (8th Cir. 2024). Federal court applying state law
Spencer v. Aetna Life & Cas. Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980). State supreme court
Kan. Stat. Ann. § 40-256. State statute
Kan. Stat. Ann. § 40-908, statute text. State statute
Christian v. Am. Home Assurance Co., 1977 OK 141, 577 P.2d 899. State supreme court
Okla. Stat. tit. 36, § 3629(B). State statute
Hamilton v. Northfield Ins. Co., 2020 OK 28; see Hamilton v. Northfield Ins. Co., No. 17-7049 (10th Cir. June 8, 2020), opinion (applying the answer to the certified question). State supreme court; federal court applying state law
Aetna Cas. & Sur. Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984). State supreme court
Ark. Code Ann. § 23-79-208(a). State statute
Ark. Code Ann. § 23-79-208(d); Nat’l Standard Ins. Co. v. Westbrooks, 331 Ark. 445, 962 S.W.2d 355 (1998), opinion. State statute; state supreme court
Arnold v. Nat’l Cnty. Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987). State supreme court
Tex. Ins. Code Ann. § 542.060, statute text. State statute
Tex. Ins. Code Ann. §§ 542A.003, 542A.007, statute text. State statute
Rodriguez v. Safeco Ins. Co. of Ind., No. 23-0534 (Tex. Feb. 2, 2024), opinion. State supreme court
Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo. 1985). State supreme court
Colo. Rev. Stat. §§ 10-3-1115, 10-3-1116(1). State statute
Am. Fam. Mut. Ins. Co. v. Barriga, 2018 CO 42, 418 P.3d 1181. State supreme court

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Insurer Penalty and Attorney Fee Statutes: Missouri, Kansas, Oklahoma, Arkansas, Texas and Colorado