Filing Suit Against an Insurance Company: Your Battle Plan

So, you’ve reached the point where negotiating with your insurance company feels like yelling into the void. You’ve filed a claim, provided all the documentation, and yet, they’ve denied it, undervalued it, or dragged their feet for so long that you’re considering hiring a carrier pigeon just to get a response. It’s time to consider your legal options. Filing suit against an insurance company is a serious step, but sometimes it’s the only way to get what you’re rightfully owed.

The short answer is: you’ll need to gather evidence, consult with an attorney specializing in insurance law, and follow the specific procedures outlined by your state’s laws and court rules. This legal path can be intricate, but with the right guidance, you can navigate it successfully.

The Roadmap: How to Sue Your Insurance Company

Before jumping into litigation, understand this is a marathon, not a sprint. Preparation is key. Here’s a breakdown of the process:

1. Exhaust Administrative Remedies: This is crucial. Most policies and state laws require you to exhaust all internal appeal processes within the insurance company before filing suit. This means filing any internal appeals or complaints within the company as outlined in your policy. Document everything. This demonstrates you made a good-faith effort to resolve the issue before resorting to legal action.
2. Consult with an Experienced Insurance Attorney: This is not a DIY project. Insurance companies are sophisticated entities with vast resources and legal teams. You need someone who understands insurance law inside and out, knows the local courts, and can level the playing field. Look for an attorney who specializes in the specific type of claim you’re making (e.g., property damage, auto accident, life insurance).
3. Gather and Organize Evidence: Your case is only as strong as your evidence. This includes:
   • Your insurance policy (the entire thing, including endorsements and exclusions).
   • The claim documents you submitted.
   • Correspondence with the insurance company (emails, letters, notes from phone calls).
   • Photos and videos of the damage or incident.
   • Expert reports (e.g., appraisals, engineering reports, medical evaluations).
   • Witness statements.
4. Determine the Legal Basis for Your Claim: Your attorney will help you identify the specific legal grounds for your lawsuit. Common reasons include:
   • Breach of Contract: The insurance company violated the terms of your policy by wrongfully denying or undervaluing your claim.
   • Bad Faith: The insurance company acted unfairly or unreasonably in handling your claim. This can include unreasonably delaying payment, failing to investigate the claim properly, or making a lowball offer. “Bad Faith” Laws differ by State, so this is very important.
   • Negligence: In some cases, the insurance company’s actions (or inactions) may constitute negligence.
5. Draft and File the Complaint: Your attorney will draft a formal complaint outlining your claim, the legal basis for your suit, and the relief you’re seeking (e.g., payment of benefits, damages for bad faith). This complaint is then filed with the appropriate court.
6. Serve the Insurance Company: Once the complaint is filed, the insurance company must be formally served with a copy of the complaint and a summons. This notifies them that they are being sued and gives them a deadline to respond.
7. Discovery: This is the information-gathering phase of the lawsuit. Both sides exchange information through interrogatories (written questions), requests for documents, and depositions (oral examinations under oath).
8. Negotiation and Mediation: Many insurance lawsuits are settled through negotiation or mediation. Mediation involves a neutral third party who helps facilitate settlement discussions.
9. Trial (If Necessary): If a settlement cannot be reached, the case will proceed to trial. At trial, you will present your evidence to a judge or jury, who will then decide the outcome of the case.

FAQs: Navigating the Insurance Litigation Maze

Here are some frequently asked questions that can help you better understand the process of suing an insurance company:

1. What is “bad faith” in insurance claims?

Bad faith occurs when an insurance company acts unfairly or unreasonably in handling your claim. Examples include: delaying payment without a reasonable basis, failing to properly investigate the claim, misrepresenting policy language, or making an unreasonably low settlement offer.

2. How much does it cost to sue an insurance company?

The cost varies significantly depending on the complexity of the case. Attorney’s fees can be hourly, contingency-based (a percentage of the recovery), or a combination of both. Other costs include filing fees, expert witness fees, deposition costs, and other expenses.

3. How long does it take to resolve an insurance lawsuit?

Again, this varies widely. Simple cases might settle within a few months, while more complex cases can take years to resolve. Factors affecting the timeline include the complexity of the claim, the court’s schedule, and the willingness of the parties to negotiate.

4. Can I sue an insurance company for emotional distress?

In some states, you may be able to recover damages for emotional distress if the insurance company acted in bad faith and caused you significant emotional harm. This is often a difficult claim to prove.

5. What is the statute of limitations for suing an insurance company?

The statute of limitations is the deadline for filing a lawsuit. It varies by state and by the type of claim. It’s crucial to consult with an attorney to determine the applicable statute of limitations in your case because if you miss it, your claim is barred.

6. What types of insurance claims are most often disputed?

Commonly disputed claims include: property damage claims (especially those involving water damage or mold), auto accident claims (especially those involving injuries), disability claims, and life insurance claims.

7. What should I do if the insurance adjuster is being unresponsive?

Document all attempts to contact the adjuster. Send written correspondence (e.g., certified letters, emails) requesting a response. If you’re still not getting anywhere, consider contacting an attorney.

8. What is the difference between appraisal and arbitration in insurance disputes?

Appraisal is a process used to resolve disputes over the value of a loss. Each party selects an appraiser, and if they can’t agree, they select an umpire. The appraisers and umpire determine the value of the loss, and their decision is binding. Arbitration is a more formal process similar to a trial, where an arbitrator (or panel of arbitrators) hears evidence and makes a decision. Arbitration can be binding or non-binding, depending on the terms of the policy.

9. How do I choose the right insurance attorney?

Look for an attorney with experience handling insurance claims similar to yours. Check their credentials, read reviews, and schedule consultations with several attorneys before making a decision. Make sure you feel comfortable communicating with them and that they understand your goals.

10. What if the insurance company offers a settlement that is too low?

You are not obligated to accept a settlement offer. Discuss the offer with your attorney and determine if it adequately compensates you for your losses. If not, you can reject the offer and continue negotiating or proceed to trial.

11. Should I keep paying my premiums while my claim is in dispute?

Yes, you should continue paying your premiums to avoid cancellation of your policy, especially if the dispute involves a claim under that specific policy. Failure to pay premiums could give the insurance company grounds to deny future claims.

12. What is “declaratory judgment” in an insurance case?

A declaratory judgment action is a lawsuit filed to determine the rights and obligations of the parties under an insurance policy. This can be useful when there is a dispute over coverage or the interpretation of policy language.

Taking on an insurance company can feel daunting, but understanding your rights and the legal process is the first step towards a successful resolution. Remember to seek expert legal counsel, document everything, and don’t be afraid to fight for what you deserve.