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Can I Sue an Insurance Company for Denying My Claim?

Close up of unrecognizable insurance agent showing his customer where to sign the contract.

You can file a bad faith lawsuit against your insurance company if it fails to meet its legal obligations under the terms of the insurance policy. Common violations include the following:

  • Wrongful claim denial
  • The untimely and incomplete claim process
  • Untimely payment to the claimant
  • Inadequate payments as it relates to insurance coverage and policy limits
  • Failure to pay valid claims

State legislatures have passed laws to protect insurance consumers like yourself. Your state department of insurance provides insurance consumers with protections from unscrupulous practices as well as for the general public.

Despite protections, it's not uncommon for policyholders to sue their insurer for bad faith insurance practices. This happens when a policyholder cannot resolve issues with their insurance provider.

Dealing with property damage, personal injuries, the death of a loved one, or some other misfortune is challenging enough. So, it's easy to feel overwhelmed when you need to add multiple contacts with your insurance agent or the insurer's adjuster to your to-do list.

Learn about suing your insurance company for denying your claim or other misconduct.

Reasons an Insurance Company May Deny Your Claim

An insurance company has an arsenal of reasons to use when denying a claim. Some reasons it provides are legitimate, but others are not. Some of the more common reasons for denying a claim include:

  • Lack of coverage: They may argue that your insurance policy doesn't cover your claim. Examine your policy's exclusions section to understand your coverage better. Ambiguities in the policy are judged in favor of the policyholder, not the insurer.
  • Application errors: An insurer may claim you made certain misrepresentations on your original application that nullify coverage under the policy.
  • Claim errors: Check your policy to determine the insurance company's notification requirements for a claim. Some timelines are as short as 24 hours.
  • Insurance fraud: Submitting false or exaggerated claims can amount to insurance fraud. Such claims come with civil and criminal consequences.
  • Bad faith denial: An insurance company won't give you this reason, but an insurer might offer many justifications. Its explanation could be couched in confusing policy jargon to disguise that it doesn't want to pay for the claim. The insurer may claim that you made a bad faith claim.

When Can I Sue the Insurance Company for Denying My Claim?

Every insurer has obligations to its policyholders. They must abide by the terms of the contract (the policy), act in good faith, and avoid unfair trade practices.

The insurance industry is generally regulated at the state level. The precise duties vary from state to state. However, these obligations typically require the insurance company to refrain from the following:

  • An inadequate and delayed claim investigation
  • Refusing to pay a claim where liability is reasonably clear
  • Failing to approve or deny a claim within a reasonable or specified timeframe
  • Denying a claim with little or no explanation as to the reason for the denial
  • Failing to defend you in a liability lawsuit where the liability policy potentially covers at least one of the claims
  • Denying a claim based on an application misstatement after the period of contestability has passed

If you believe your insurer improperly denied your claim, you can explore legal options, including suing your insurance company.

You should contact a qualified attorney if you think your insurance company is being unfair. It's also wise to consider contacting an insurance claim attorney even before receiving a claim denial. Sometimes, the presence of an experienced insurance professional can help persuade the company to honor its obligations. It may agree to a fair settlement at that point.

What Types of Legal Action Can I Take Against My Insurance Company?

Each state has statutes and case law regulating the insurance industry, including the types of lawsuits you can bring against an insurer. Your insurance policy is a type of contract, and every state allows for a breach of contract action.

Many states also allow you to pursue a bad faith tort lawsuit. Additionally, you may be able to sue under your state's unfair trade practices laws. Many states have codes or statutes pertaining directly to consumer protection within the insurance industry.

Damages Available

An insurance attorney can explain the damages available to you and the likelihood of your success. Each state has different rules about the types of damages you can pursue in a given lawsuit.

Compensatory damages, such as medical expenses and lost wages, are available in each lawsuit. On the other hand, punitive damages are only available in some cases and may be limited by state law or the court.

Tips for Suing the Insurance Company for a Denied Claim

If you're considering suing your insurance company, it's always best to be prepared and keep detailed records. Some ideas to keep in mind include:

  • Document any correspondence with the insurance company and its representatives. Keep copies of emails and take notes of phone conversations, including dates and the names of representatives. Stay calm and assume the insurance company is recording your calls.
  • Maintain records of your insured property, including receipts and pictures of property insured under a homeowner's insurance policy or other relevant policy. Take pictures immediately after the accident.
  • Keep track of expenses you incur, such as repairs, healthcare expenses, attorney's fees, and lost wages. Be honest in your assessments and record-keeping.
  • Choose an attorney with extensive experience in insurance litigation. Insurance law can be complex, time-consuming, and expensive.

If you decide to sue your insurer, this documentation will help your attorney present a strong case.

Can I Sue My Insurer?

It's possible. An auto accident attorney may be necessary if you are unfairly compensated or your insurer denies your claim. If you've recently been in a car accident and are currently facing difficulties with your claim, seek assistance. A car accident lawsuit may be necessary. You can sue your insurer following accident claims in some car accident cases.

If you fail to receive a fair settlement offer or compensation following a car accident, you may have a legal claim against your insurer. An insurance adjuster's investigation may have led to this result. If this happens in your case, you should speak with an experienced attorney.

Don't Fight Your Insurance Company Alone

If you're at the point of suing your insurance company for denying your claim or committing other misconduct, it's time to look for a local insurance attorney. They can defend your interests.

You've already had to deal with the events giving rise to the insurance claim. Get help with an uncooperative insurer. You can bet that the insurance company will be well-equipped with its team of experienced lawyers. They will do everything they can to defend their client. Level the playing field by contacting an insurance attorney today.

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