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Can You Sue Your Own Insurance Company?

The answer to this ‘million-dollar’ question is YES. But ultimately, whether the outcome will be successful will boil down to one key question: “Was there some form of valid insurance coverage in existence when the damage, loss, or injury occurred?”

Insurance is a form of contract, and like any contract, once there is a breach or one party fails to perform under the insurance agreement, there can be legal consequences. While you can file a lawsuit against your own insurance company, certain conditions must be met before proceeding if you want to ensure a successful lawsuit.

The general concept underlying an insurance policy is that the insured will receive compensation from the insurer for any agreed loss, damage, or injury to the insured or the insured’s property, so long as the insured made timely premium payments under the insurance agreement.

There are a few instances in which you may have to sue your insurance company. The most common situation is a car accident, particularly when the ‘at-fault’ party has no insurance coverage. When an uninsured driver rams into your vehicle, you might have an option to pursue a claim against your insurance company (yeap, you heard that right!) to help you recover.

Since you purchased the insurance (through periodic insurance premium payments), you’re entitled to some form of benefits or compensation. This rule comes in super handy when you’ve suffered a major car wreck and the at-fault driver absconds from the accident scene.

There’s a wide array of benefits you can seek in your bid to secure the replacement value of your car, depending on the circumstances of the accident — home maintenance benefits, funeral benefits, death benefits, medical benefits, rehabilitative benefits, attendant care benefits, and so on.

You might be wondering why you would ever find yourself in a situation requiring you to sue your insurance company after a car accident. The answer is simple — insurance companies do well by collecting insurance premiums from policyholders but hardly fulfill their end of the bargain by compensating policyholders after their losses. If insurance companies do issue any payment, they are known to employ various unscrupulous tactics to bring down the compensation amount.

Dealing with injury, loss, property damage, or possibly even a loved one’s demise from a car accident can take a huge toll on you physically and mentally. Having to enter a legal tussle with your insurance company during this time is probably the last thing you would want to put on your plate.

But if your insurance company has denied your claim, we have a piece of advice for you — don’t give up. In this post, we will review the process of suing an insurance company for denied claims and explain the steps you can take to sue your own insurance company if need be.

First, let’s review the situations in which an insurance provider can be found negligent, thereby giving rise to actionable claims.

Examples of Insurance Provider Negligence

Most events that trigger a lawsuit against an insurance company are usually acts of negligence. Negligence is a legal concept in tort law that arises when there’s a breach of one party’s duty of care to another.

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In the insurance industry, some of the most common instances in which one should consider suing an insurance company for negligence are the following:

  • Failure of an insurance agent to inform the insurance company about a claim;
  • A misrepresentation of the coverage under a given policy; 
  • Failure to notify a client about the insurance company’s financial challenges; and
  • A refusal to sign up a client for the coverage requested.

Reasons an Insurance Company May Deny Your Claim

Building a successful claim against an insurance company might seem simple. But it isn’t. Frequently, insurance companies will do all they can to prevent you from getting your benefit.

So it’s essential to know the factors an insurance company will consider before accepting or denying a claim. This will help you prepare your facts accurately.

Let’s say your claim arises from a car accident caused by another individual. That individual’s insurance company will carefully review the policy held by its insured. Usually, companies reserve the right to refuse a claim if its insured has unresolved issues under the insurance policy.

For instance, if there is no valid insurance coverage in existence, an insurance company could deny your claim. Consider this scenario — you suffered an injury in a store, and the store manager gives you the contact information of the store’s insurance company.

But upon contacting the insurance company, you are informed that there is no existing coverage for that particular store. Consequently, your claim will be denied because no valid coverage exists.

Also, if the claim is not timely submitted or if the kind of damage or injury suffered is excluded from the coverage, the insurance company will not accept the claim. However, that’s not where it has to end. You can bring an action against an insurance company for denying your claim, especially when the circumstances suggest bad faith on the company’s part.

Kinds of Lawsuits That Can Be Filed Against Insurance Companies

There are several kinds of lawsuits you can bring against insurance companies. The most common cases are matters regarding the negligent conduct of an insured party.

A prime example is when you’re involved in an auto accident and, according to state law, the insured party who hit you is evidently at fault. If the insurance company refuses to provide compensation for your medical bills, you can sue the company and obtain damages.

Other lawsuits that policyholders bring are usually against their insurance providers for breach of contract. As discussed earlier, insurance is a type of contract between the insured party and the insurance provider, in which the insurance provider agrees to cover the losses of the insured party in exchange for premium payments from the insured.

When you pay your premiums according to the terms of the insurance agreement, you are entitled to have your losses covered by that insurance policy. If the insurance company fails to provide coverage, you can sue for breach of contract.

In some cases, you can file a lawsuit against your insurance company for violation of consumer protection laws if the company’s actions breach any federal or state laws on consumer protection.

Further, if it’s clear that the company has acted in bad faith — for instance, when the company outright manipulates the terms in the policy to avoid the financial obligation of your claim — you can file a lawsuit against the insurance company.

When Can I Sue My Insurance Company?

Remember that insurance providers must provide compensation for all losses covered in the agreed policy. So, as soon as a breach of this duty occurs, either due to unlawful conduct or bad faith, you can proceed to sue the company.

Since the insurance industry is largely regulated at the state level, its specific duties vary slightly according to the laws of each state.

However, a breach of the insurance company’s duties may generally arise when it does any of the following:

  • Refuse to make payments for a claim that has reasonably clear liability;
  • Give no explanation for why a claim was denied;
  • Inadequately delay investigations into the claim;
  • Deny a claim on the grounds of application misstatement after the period of contestability has passed;
  • Fail to deny or approve a claim within a reasonable time; and
  • Refuse to represent and defend you in a liability lawsuit in which at least one of the claims has potential coverage under your liability policy.

What’s the Process of Suing an Insurance Company for Negligence?

When suing an insurance company for negligence, your first step should be to contact an experienced attorney. Hiring a lawyer skilled in insurance litigation will aid the success of your negligence lawsuit.

Insurance companies have mastered the dark art of obligation avoidance, and a professional attorney — one who can beat them at their game — is your best bet to manage the situation and help you get a fair settlement.

Next, ensure that you have accurately followed the insurance company’s reporting process. Oftentimes the policy stipulates that you should have exhausted all available internal remedies before proceeding with a lawsuit.

Afterward, keep track of any communications between you and the insurance provider, as such records could be crucial to the success of your negligence claim. All expenses you incur should also be carefully documented.

Another important factor is bringing your case before the appropriate court. Unless you’re a legal professional, you should make the smart move of contacting an experienced insurance attorney for advice. This way, you avoid filing your claim with the wrong court and risk having your case thrown out.

To sum it up, giving yourself a fair shake all boils down to step one — engage the services of an experienced, competent attorney, and all the other steps will be taken care of by the professional.

Tips for Suing an Insurance Company for Denying Claim

Wondering how to sue your insurance company? If you’re suing the company for denying your claim, here are some steps to consider to guide you to success:

Tip 1: Documenting all correspondences

Any time you communicate with the insurance company, whether by email or phone, make sure you keep a copy of such correspondence. Be vigilant. The insurance company won’t take any chances, and neither should you.

Tip 2: Keep track of your expenses

Keep a detailed and honest record of your expenses — medical bills, lost wages, attorney’s fees, or vehicle repairs.

Depending on the facts of your case and the law in your state, a contingency fee might make a world of sense here — an arrangement in which you don’t have to pay out of pocket because  your lawyer will get paid a percentage of the benefits recovered from your insurance provider. Many cases result in exorbitant legal fees, so a contingency fee plan can be a cost-effective way for you to pursue your claim while ensuring that your lawyer will be compensated.

Tip 3: Choose an experienced attorney

Try to engage the services of an attorney who has experience in insurance litigation. An experienced insurance litigation attorney will be more familiar with the entire process and offer you proper guidance. Plus, this attorney will likely know the dark underbelly of most of these insurance companies based on past dealings with them, which will be advantageous for you. A strong attorney-client relationship can be the key to a successful lawsuit or settlement with the insurance company.

Tip 4: Maintain records of your insured property

If the insurance policy covers your property, make sure you keep records pertaining to it. Immediately after any damage occurs to your insured property, such as your house or car, take pictures of the property and document the damage as much as you can.

You should also keep records of receipts and any vital information about the insured property.

Can I Sue an Insurance Company Without an Attorney?

Your chances of winning a lawsuit against an insurance company are higher when you have the professional help of an attorney. If you choose to take legal action on your own, you may make mistakes that could cost you the success of your claim. So while you can sue without an attorney, it’s advisable that you do not in order to avoid unnecessary mistakes and costs.

How to Find an Attorney to Sue an Insurance Company

A readily available route to do this is to visit a notable law firm within your state and request the services of an experienced insurance attorney. You can also do a quick internet search to find the best insurance lawyers near you. Getting recommendations from people you know who previously filed insurance claims and succeeded is also an excellent way to procure a trustworthy insurance lawyer.

Wrap Up

You deserve an adequate settlement for any loss, damage, or injury you end up suffering from an unfortunate situation. That is the essence of having insurance. Sadly, insurance companies can be very uncooperative.

You can bet your bottom dollar that insurance companies will come well-prepared with enough tricks of the trade to deny you your rightful compensation, along with their arsenal of legal experts who will do whatever they can to deny you your claim. They play dirty and will take no prisoners.

So if an insurance company unfairly denies you your rightful claim, do not hesitate to find an experienced insurance lawyer who can defend you and protect your rights against the insurance company. Insurance exists to help you in a time of need. Don’t let the insurance companies take this away from you.

Article by Sofi Ostymchuk

Sofi Ostymchuk was a Content Lead and Legal Writer at Lawrina. Sofi managed the content on the blog, communicated with contributors, looked for interesting topics, and created articles in cooperation with lawyers and law experts.

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