When you break or do not follow the terms of your insurance policy, you will sue the insurance provider. Specific breaches include failure to pay claims in a timely manner, failure to pay claims filed reasonably or allegations in bad faith. Luckily, there are a variety of laws aimed at protecting consumers such as you, and it is not unusual to sue an insurer.
It is difficult to cope with collateral loss, accidents, a loved one’s death or some other misfortune. And it is easy to feel stressed if you are forced to deal with your insurance provider. Learn all about the reasons for refusing your claim or any wrongdoing by your insurance provider.
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Reasons an Insurance Company May Deny Your Claim
There are many grounds for an insurance provider to deny you your offer, some of them valid, others not. Two of the most common explanations are:
- Lack of coverage: They may argue that your claim isn’t covered by your insurance policy. Examine your policy’s exclusions section to better understand what’s not covered. 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 the coverage of your policy.
- Claim errors: Check your policy to see what the requirements are for notifying the insurance company of a claim. Some timelines are as short as 24 hours.
- Insurance fraud: Submitting false or exaggerated claims can amount to insurance fraud, carrying civil and criminal consequences.
- Bad faith denial: Of course, they won’t give you this reason, but an insurer might offer many justifications, couched in confusing policy jargon, to simply disguise the fact that they just don’t want to pay for the claim
When Can I Sue the Insurance Company for Denying My Claim?
Each insurer’s policyholders have several obligations. They must comply with the terms of the contract (the policy), behave in good faith and prevent unfair trade practices. Their specific responsibilities vary from state to state, despite the general state legislation for the insurance industry. Nevertheless, the insurance provider usually needs to refrain from the following:
- An inadequate and delayed investigation into the claim
- 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 at least one of the claims is potentially covered by your liability policy
- Denying a claim based on an application misstatement after the period of contestability has past
You can look at suing the insurance provider if you think the claim has been unfairly rejected and your insurer appears not to budget. If you believe your insurance policy is unreasonable, you should also think about hiring an insurance lawyer before your claim is rejected. Often an experienced insurance firm can help persuade the client to better comply with its obligations and to accept a reasonable settlement.
What Types of Legal Action Can I Take Against My Insurance Company?
Again, each state has its own statutes and case law regulating the insurance industry, and these include the types of lawsuits you can bring against an insurer. Every state allows for a breach of contract action since your insurance policy is a type of contract. 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 which pertain directly to trade practices within the insurance industry.
An insurance attorney can explain the kinds of damages available to you, since each state has different rules about the types of damages you can pursue in a given lawsuit. However, compensatory damages, such as medical expenses and lost wages, are available in each of these kinds of lawsuits. 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
Whether you’re currently considering suing your insurance company or not, 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 they’re recording your calls.
- Maintain records of your insured property, including receipts and pictures of what’s insured. Take pictures of a property, like your car or home, immediately after an accident.
- Keep track of expenses you incur, such as medical bills, repairs, 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 do decide to sue your insurer, having this sort of documentation will help your attorney present a strong case.
Don’t Go Up Against Your Insurance Company Alone
When you intend to sue your insurers for refusing your claim or for committing any wrongdoing, it is time to look for a professional insurance lawyer who is willing to protect your interests. Besides an uncooperative insurer’s nightmare, you have already had to deal with incidents that lead to the insurance claim. You can also trust that the insurance firm will be well-equipped to protect its clients with their own team of qualified attorneys. Call an insurance agent today to assess the standard of risk.