How To Prepare for an Insurance Lawsuit

Most insurance claims are paid without issue. But if the insurance company denies your claim, you typically must file a personal injury lawsuit against the responsible party. For example, if you are hurt in a car accident, you usually submit a claim with the at-fault driver’s insurance carrier.

If your claim isn’t paid, you will sue the driver personally for damages. In this scenario, the insurance company must legally represent the other driver. But you would not name the insurance carrier as a defendant in your civil complaint.

But sometimes, you can sue the insurance carrier directly. It is rare, but if your personal injury lawyer can prove that the insurance company operated in bad faith, you may have a claim for damages.

This article explains how to file suit against an insurance company. You’ll learn about:

• Situations where you would need to take legal action against an insurance carrier
• What documents and records your attorney will need to prepare your case
• What your personal injury law firm must prove to win your case
• How to research experienced attorneys in your area

There Are Several Types of Insurance Policies

Many types of insurance policies can give rise to legal action. Some common types of insurance policies include:

• Renter’s insurance
• Real estate insurance (title insurance)
• Property insurance
• Auto insurance
• Medical or health insurance
• Homeowner’s insurance

Regardless of the type of insurance litigation, your attorney will need detailed information on the insurance dispute and the underlying accident or injury.

When Can I Sue for Bad Faith?

In most states, you cannot sue the insurance company after a car accident or other event. If the insurance company refuses to pay your claim, you must sue the other party directly. The law requires the insurance company to represent the insured. You can only sue the insurance company if you can prove bad faith.

Bad faith claims are challenging to prove. It’s not hard for the insurance carrier to demonstrate a valid reason for denying your claim. Rarely will you sue for bad faith with a small claim. It isn’t worth suing over a few hundred (or a few thousand) dollars. Plus, the insurance carrier would rather pay a small claim than spend money on legal fees.

Before you file your lawsuit, research your legal options. You want to hire an attorney who handles this type of case. Many lawyers handle personal injury cases on a contingency fee basis. This means your attorney only gets paid (through a percentage of your award) if you win your case.

Reasons To Sue Your Insurance Company

Claimants rarely have to sue an insurance company. Even when they deny a person’s initial home insurance claim or property damage claim, they eventually resolve it. But there are times when the insurance adjuster refuses to pay. Or they’ll only offer a partial payout.

Legally, for an insurance company to deny a claim, they must have a legitimate and reasonable basis to do so. For example, if the carrier canceled the policy for non-payment, the courts would not expect the insurer to pay a claim.

The same applies if the claimant was responsible for the accident or damage. Your claim may not be payable if you suffered water damage because you failed to fix or remove a faulty water heater.

Before you sue an insurance company, you should meet with an insurance law attorney. They’ll review your case and let you know if it’s worth pursuing. If there is sufficient evidence that the insurance company acted in bad faith or breached the terms of your policy, it may be worth filing legal action.

What Damages Can You Demand in Your Lawsuit?

If you sue the insurance company for bad faith, you must list your damages in the initial complaint. The type and amount of compensation you receive depends on the facts of your case.

At a minimum, your attorney will demand the following types of damages:

• Money due from the underlying personal injury claim, such as medical expenses, property damage, and pain and suffering
• Attorney’s fees
• Money your own insurance carrier paid in the interim
• Damages for emotional distress
• Any money the insurance would have paid had they acted in good faith
• Money you spent on a public insurance adjuster for a homeowner’s insurance claim

Your total payout will probably be less than your entire demand. Your attorney will try to negotiate a fair settlement on your behalf. Very few of these cases go to trial.

What To Look for in a Qualified Insurance Lawyer

If you need to pursue legal action against an insurance carrier, you’ll want to retain an attorney who handles this type of case. Every law firm has its own practice areas. You can usually review this information on the firm’s website.

Some things to consider when searching for a local insurance lawyer include:

• How far are the law firm’s offices from your home or business?
• What have other client experiences been like?
• What legal information does the firm provide on its website?
• Has the firm been sued for malpractice in the past?
• Does the firm answer clients’ phone calls and emails?
• Are the lawyers at the firm members of the State Bar?

Once you’ve identified the attorney you want to handle your case, you will call and schedule your free case evaluation. Don’t be surprised if your first meeting is with one of the law firm’s paralegals. It’s common for paralegals to meet with potential clients during the intake process. If you and the firm decide it’s a good match, you will meet with the attorney handling your case.

What Happens During Your Free Case Evaluation?

When meeting with a prospective client, an attorney wants to determine whether they have a viable case. It’s not enough that you want to sue your insurance carrier (or any other insurance company).

The attorney will treat you like any new client during your free consultation. They will likely have an intake process they follow before onboarding any new client. They will need certain information before providing you with their legal services. This is the case whether you have a referral or obtained the attorney’s information through FindLaw’s insurance lawyer directory.

Documents To Show Your Personal Injury Attorney

Most personal injury lawsuits involve insurance claims. This is the case with car accidents, slip-and-fall cases, and wrongful death lawsuits. Generally, the insurance company should cover your medical bills and other expenses when you suffer injuries in any accident. However, both parties should anticipate litigation.

In many cases, the injured party only knows the extent of their losses long after the accident or incident. This is why you must keep impeccable records of what happened. Your attorney will need all relevant documentation if they need to prepare for trial. They’ll even need these records to negotiate a settlement offer.

Below is a list of the documents and records you’ll need to give to your attorney:

• The insurance policy
• All other insurance policies you have (remember to check your credit card information)
• All your correspondence with your insurer
• All notes of telephone conversations with your insurer
• Phone logs and message pads, if they refer to your insurer
• Documentation relating to the covered incident at issue
• Any estimates or adjuster’s reports that show your damages
• Canceled checks that show your damages
• Bills or invoices that show your damages
• Receipts that show your damages
• Files from litigation resulting from the covered event
• Correspondence threatening or warning of litigation resulting from the covered event
• Files from previous attorneys

What Other Information Will My Attorney Need From Me?

Although most insurance companies are honest and reputable, sometimes, they don’t live up to their obligations. Litigation involving insurance coverage is complex and time-consuming.

The first thing you must do is find an attorney. You may already have an attorney who’s handled other matters for you. However, you want someone who has experience handling insurance litigation. You wouldn’t want a divorce lawyer handling your car accident lawsuit.

When you first meet with your lawyer for your free initial consultation, it’ll feel like you’re interviewing the attorney like a potential employee. Your attorney needs your input and cooperation to represent you adequately. They’ll need the following information before they agree to represent you.

Personal Information

Your insurance lawyer will need information about you before they offer legal representation. That’s the only way they can fully prepare your claim. It’s also important that your lawyer has a good client relationship. This way, you trust them, and they can trust you.

The information the law firm will need includes:

• Name
• Social Security number
• Address, including county
• Length of time at that address (in years)
• Previous address(es) (for the last 10 years)
• Your work telephone numbers
• Your home telephone numbers
• E-mail address(es)
• Prior litigation
• Current litigation

Information About Your Insurance Company

In addition to personal information, your attorney will need information about the insurer. Bring a copy of your policy (or the policy at issue) to your initial meeting. The policy contains most of the information your lawyer needs.

• Name
• Date you purchased the policy
• Agent who sold you the policy
• Insurance carrier’s address, including county
• Policy number(s)
• Previous insurance policies (for the last 10 years)
• Previous policy numbers
• Contact person at the insurer?
• Have you made claims under this policy before?
• Have you made claims from this insurer before?

Information About the Accident or Incident: Why Are You Suing the Insurance Carrier?

Your lawyer needs to know what happened to determine if you have a valid case. In your own words, you’ll describe the incident or accident. You’ll also want to give your lawyer a copy of the police report and other investigative records.

The information your personal injury lawyer needs includes:

• Describe the incident that caused the loss
• How much are the damages you have suffered?
• Do you have any correspondence or other written documents that relate to any contacts you have had with your insurer?
• Are you aware of any claims or defenses your insurer may have against you? If so, please explain them.
• Is there anything you haven’t told your insurer?
• Has your insurer offered a settlement? For how much?

Providing as much of this information to your attorney before you meet allows them to review the records and prepare any questions.

How Can Your Insurance Claim Attorney Prove Bad Faith?

Few attorneys file bad-faith lawsuits against insurance companies because they’re difficult to win. It’s not enough to show that the defendant should’ve paid your claim. You must prove the elements of a bad faith claim to collect damages.

Each state has a set of insurance laws governing insurance disputes and bad faith claims. In some states, your only recourse will be to file a breach of contract claim. Other states allow you to sue under breach of contract or bad faith.

To prove bad faith on the part of your insurance company, your attorney must demonstrate the following:

• The insurance company failed to pay benefits according to the terms of your insurance policy
• The defendant lacked a reasonable basis for this failure to pay
• You suffered a loss as a result of the insurance company’s decision

If your attorney can’t prove all three elements of a bad faith claim, you will not prevail.

What Evidence Can Your Attorney Use To Prove Your Claim?

In most personal injury cases, your attorney has different types of evidence. For example, in a car accident claim, they have the police report, the mechanic’s estimate, and pictures of the accident scene. In a property damage claim, they can submit copies of the damaged item’s appraisal. With an insurance lawsuit, it works a bit differently.

The evidence available to your insurance dispute attorney includes the following:

• Expert witnesses (insurance agents) who have the necessary know-how about standard business practices in the insurance industry
• Testimony and reports from a public adjuster who reviewed your claim
• States in your state dealing with unfair settlement practices
• Copies of the insurance company’s corporate policies and procedures
• Documentation from your underlying insurance claim or accident

The more evidence you have, the better your settlement offer will be. Remember, the insurance company and their legal team will make a lowball offer to start. Your attorney will negotiate a better offer once they get closer to trial.

Most Insurance Law Disputes Settle Out of Court

Sometimes, your attorney will need to take your case to trial. But this is rare. More than 95% of all lawsuits settle out of court. This is especially true for small claims. It isn’t worth spending thousands of dollars to fight a small to mid-size claim.

Plus, trials aren’t in anybody’s best interest. They’re time-consuming and expensive. There’s also the risk that you could lose. It’s often better to settle for a reduced amount rather than walk away with nothing.

Most of the time, your lawyer will negotiate a fair settlement sometime before trial. It may only happen on the eve of the trial. The insurance carrier may want to wait until the last minute, hoping that you’ll back off. Or they may want to hold on to their money for as long as possible.

How To Find an Attorney To Help With Insurance Litigation

Because your state’s statute of limitations and laws are relevant, it’s important to choose an attorney licensed in your state. FindLaw’s directory of experienced personal injury lawyers can get you started. Enter your city or ZIP code for a list of qualified legal professionals near you. Your search results will also show ratings and contact information.