The Ins and Outs of Insurance
Insurance policies are contracts that stipulate what is covered and what is not. Your insurance company might deny a claim, stating that it falls outside the scope of what they are required to cover under your policy. Your insurance company may also offer a settlement amount that is less than what you believe you deserve, or delay payment for a long time. These disagreements with insurers are known as insurance disputes.
Denial
Insurance companies deny claims for many reasons. They may claim the insurance paid for a loss like damage in an accident only covers damage that results from a car crash, rather than other causes like fire or flood. A person injured by a driver with no insurance may find that the company denies that their own policy covers the loss. Sometimes, the denial is based on an incorrect assumption about the facts of the case, and other times, the dispute is over ambiguous wording in the contract. For example , your policy may include undefined terms such as "reasonable" or "normal" when setting guidelines for payments the company must make.
Low Offer
After an accident, your insurer may offer you what seems like a good price for your claim. What if you think it’s not enough? Insurance companies often try to settle quickly, especially when you haven’t hired an attorney. Their goal is to get you to take a low offer before you realize it’s not even close to what you deserve. Whatever cash reserves they have to pay for losses will not last forever, so paying out a fair and legitimate claim is not in the company’s financial interest.
Payout Delays
If you have received a partial or full repair estimate within the timeframe of your claim, you will want to consider contacting the insurance company to ask when you can expect payment. They may tell you that a payment is coming "any day now" or that there is some sort of administrative problem, but there are strict deadlines for the company to pay you. If they don’t pay or continue to offer excuses, it’s time to contact an attorney.
When to Sue the Insurance Company
While insurance claims are fresh on your mind, both from a claims perspective and from your car accident perspective, it is even more important to consistently stay on top of where the case is. Similarly, it is very rare that you will need to sue your own insurance company, as it is usually not needed in a car accident case. However, there are some circumstances that happen which can warrant suing your insurance company instead (or in addition to suing the other insurance company). An important consideration is if your insurance company denies your claim without any reasonable basis for doing so. The additional conditions that warrant suing your insurance company are if your insurance company breaches your contract or if they act in bad faith, which I will explain below.
In the event that your insurance company acts in bad faith (or does not fulfill the contract), you may have a legal basis to sue your insurance company. The underlying premise is that, especially when you are dealing with your insurance company, there is a contract in place that states the terms of how your insurance company should interact with you. If they breach that contract, then it is possible to sue them. For instance, if your insurance company fails to investigate your claim properly, it may be a case of bad faith. You may be able to prove that your insurance company had an obligation to investigate your claim thoroughly, but they did not. Another example is if you suffer a loss and your insurance company refuses to pay it out according to the contract in place. This later example also shows how fulfilling their contractual obligation may sometimes go hand in hand with acting in bad faith. It is not enough, however, to simply feel as if your insurance company does not have your best interests at heart. You must prove that the insurance company actually breached the contract and/or acted in bad faith according to the rules and regulations in the specific state.
How to Prepare for Your Lawsuit or Demand
Before taking the plunge into a costly lawsuit against the insurance company, it’s essential to ensure that you have taken all of the necessary steps. Here are some of the ways you can prepare in advance: Gather all relevant evidence If you are considering suing an insurance company, you must have the necessary evidence and documentation to support your case. The most important step is to send your INFOREQUEST form – without this form, the insurance company may not be obliged to answer your questions. Next, make sure to take a look at your policy, paying close attention to the list of exclusions and how the company defines basic terms. You will also want to have any notes or contacts from phone conversations with the insurance company handy – it can be challenging to remember every detail a year or more after the fact. Finally, consider enlisting the help of any witnesses, people who had insight into the situation and can verify your version of events. Document everything The next step is to document every interaction you have with the insurance company. If you attempt to call the insurance company, you should take notes on the date and time of the call, the name of the person you spoke with and the details of the conversation. Make sure to save any files, as well as copies of any documents submitted to the insurance carrier. Consult an attorney Your final step before filing a lawsuit is to consult an attorney. Speaking with a legal expert can help you determine whether it is worth your time and money to file a lawsuit, should you decide to go that route. An attorney can also help you understand exactly what evidence you need.
How to Bring a Lawsuit Against an Insurance Company
The first step in filing a lawsuit against an insurance company is to file a complaint with your state’s court system. If you’re working with an attorney, your attorney will likely file the complaint on your behalf. A complaint is a legal document that specifically outlines your grievances and how you believe these grievances have harmed you. The complaint should include a request for a specific award, such as damages. The next step is to serve a copy of your complaint to the defendant, which in this case would be the insurance company. By serving the defendant, you are notifying them of the lawsuit and giving them a chance to respond with their own complaint. A case number will be assigned and the court will schedule a trial date. In many cases, you will be required to attend a settlement conference before the trial date where you and the insurance company can come to an agreement about an appropriate amount of compensation. If you and the insurance company are unable to come to an agreement, you will appear in court before a judge. The judge will preside over your case and make rulings on whether or not to decide the case in your favor and to award you whatever damages you requested in the complaint. If you are awarded damages, you should expect to receive the damages directly from the judge rather than from the insurance company.
Working with an Attorney
If your claim is denied, you should consider hiring an attorney to help with filing suit and to represent you in any lawsuit. While it is not required by law, hiring a lawyer after your claim is denied has many benefits, including: There are many defenses that an insurance company may raise in response to your lawsuit. A lawyer will be able to more effectively respond to these defenses as he has the experience to anticipate what the defendant will argue and tailor his strategy and argument accordingly. A lawyer is also better equipped to handle opposing counsel. This is doubly true if the insurance company hires an attorney to represent them , which they often do. The law firm who represents an insurance company is likely to have years of experience representing insurance companies in similar suits. A lawyer who has similarly represented car accident victims can counter that experience. Let’s face it: most people do not have the knowledge and experience needed to handle a lawsuit against an insurance company. A lawyer’s experience and background means they can navigate the legalities with ease and avoid costly mistakes that can lead to the loss of a lawsuit. An attorney can also better prepare you for what to expect throughout the process, both in and out of the courtroom, as well as help you keep your expectations in check.
What You Should Realistically Expect to Get and How Much You Might Claim
Deciding to sue an insurance company after a car accident is a tricky proposition. In all likelihood, you are not likely to win your case with the insurance company but if you don’t at least try to fight for fair treatment, you may never get proper compensation. Here are a few expected outcomes from suing the insurance company and possible awards:
Settlement – Of course we all hope for a settlement. This means that everyone settles before going to court and you get a chance to work out your own deal with the insurance agency. With the assistance of your lawyer, you can negotiate a settlement before the lawsuit is filed. If the insurance company agrees to the terms, you will reach a settlement agreement. Then, after the case is formally settled your lawyer will dismiss the case in court.
Court Ruling – While the majority of cases settle out of court, there will always be a percentage that will not settle. If it comes to litigation, your lawyer will have to start formulating a case, hiring experts and preparing for trial. Once they file suit, the case is "at issue" and the courts will decide on an appropriate court date. The judge in the case should rule fairly and impartially. Depending on your case, you may receive some or all of your damages claim as awarded by the judge.
Damages Award – There are a number of damages you can claim against the insurance company. You can file for damages related to your medical expenses, any wages lost during your recovery, pain and suffering, at home care, and the effect on your quality of life. These are not easy to win and require support from your legal team as well as professionals. Be prepared for a long and winding road when you decide to sue an insurance company for damages or injuries sustained from an accident.
Other Options to Pursue Instead
Litigation is not the only way to resolve disputes with car insurance companies. Many policies and courts require other forms of alternative dispute resolution as a threshold before the case can proceed to litigation. One of the alternatives is mediation.
Mediation is an informal process in which a neutral third party, the mediator, assists the parties in reaching a mutually agreeable resolution. The mediator does not decide the outcome of the case but instead facilitates communication and helps the parties find common ground. Mediation can be expedited if a claim is low value and only a few issues exist between the parties to discuss. For example, most claims under the $2,500 threshold meet this definition, and many of these cases even settle before filing a lawsuit due to the short length of time that is required for the filing of the lawsuit .
The advantages of mediation include its ability to be squeezed into a much shorter time frame than litigation, it is very inexpensive and depending upon the particular matter at hand, it is the best way to resolve a case where the parties need to work together on business going forward. These are all enticing benefits to consider. The problem is that mediations fall through quickly as well because all the bad faith and game playing is already done by the time a case proceeds to mediation. As such, the most significant disadvantage is that the vast majority of mediations do not result in settlement. That is not to say that mediations are not useful however they do have a dismal success rate.
