Can You Sue Your Own Insurance Company?

Can You Sue Your Own Insurance Company?

Getting into a dispute with your own insurance company can make an already stressful accident even harder to deal with. Learn when you may need to take legal action against your insurer and what you may be able to accomplish by filing a lawsuit.

Key Takeaways



• You may be able to sue your own insurer if it wrongfully withholds benefits under your policy or handles your claim in bad faith.
• Getting a denial, facing delays or receiving a low settlement offer doesn’t automatically prove that an insurer acted in bad faith. You’ll need to consider the insurer’s reason, your policy terms and how the company handled your claim.
• Filing a lawsuit against your own insurer may let you seek unpaid policy benefits and, when state law allows it, other damages caused by bad-faith conduct.
• The outcome of suing your own insurance company will depend on your policy, the evidence in your case, the claims you bring and the laws in your state.
  

Having your own insurance company refuse to pay benefits after an accident can feel especially frustrating because you bought the policy to protect yourself. Getting a denial, facing a delay or receiving a low offer doesn’t automatically mean the insurer did something illegal, but certain claim-handling problems can raise serious legal questions.

When your policy should cover a loss but your insurer won’t honor its obligations, can you sue your own insurance company to protect your rights?

Can You Sue Your Own Insurance Company After an Accident?

You may be able to sue your own insurance company after an accident if it refuses to pay benefits you believe your policy covers. Depending on what happened and the law in your state, you may have a claim for breach of contract, insurance bad faith or another legal violation.

Filing this type of lawsuit is different from making a claim against the person who caused your accident. In many injury cases, you seek compensation from the at-fault party and their liability insurer handles the claim. Suing your own insurer usually means you’re challenging whether the company met the obligations it owes you under your policy.

What Are Some Reasons You Might Want to Sue Your Own Insurance Company?

There are several common reasons you may consider suing your own insurance company, especially when you believe it failed to honor your policy or handled your claim unfairly.

Your Valid Insurance Claim Was Denied

If your insurer denies a claim that your policy should cover, you may have reason to question whether the denial was justified. However, a denial alone doesn’t necessarily mean the insurer acted in bad faith, which generally means it handled your claim unreasonably or unfairly.

Reviewing the denial letter alongside your policy can help you see how the insurer reached its decision. An attorney can also look at whether the company relied on a valid exclusion or interpreted your coverage incorrectly.

They Delayed Paying What You Were Owed

Insurance companies need time to investigate claims, but delays can become a problem when the insurer can’t give you a reasonable explanation for why it’s taking so long.

If the insurer keeps asking you for information you’ve already provided, stops communicating with you or fails to make a decision after receiving what it needs, the delay may point to unreasonable claim handling.

A prolonged delay can also leave you waiting for money you need to cover medical bills, repairs or other losses tied to the accident.

You Received a Lowball Settlement Offer

Insurance companies don’t have to agree with your valuation of a claim, and a low offer by itself doesn’t necessarily mean the company acted improperly. However, if the insurer makes an offer that doesn’t reasonably account for your evidence or the benefits available under your policy, you may question whether it fairly evaluated your claim.

Comparing the offer with your documented losses and the coverage available under your policy can help show where the insurer may have undervalued what you’re owed.

You Were Misled About What Your Policy Covers

Your policy is a contract, so your insurer should apply its terms accurately when deciding what benefits you’re entitled to receive. If the insurer misrepresents your coverage or interprets the policy in a way that conflicts with its terms, you may have a coverage dispute. The policy language, endorsements and any written explanations from the insurer can help clarify what coverage actually applies.

This can be especially important when you’re making an underinsured motorist claim because the at-fault driver’s insurance isn’t enough to cover your losses.

Evidence Supporting Your Claim Was Ignored

The evidence you provide to your insurer helps show how the accident happened and the losses you suffered as a result. If your insurer ignores medical records, accident reports, photographs or other information that directly supports your claim, you may have reason to challenge its decision to deny or reduce payment.

For example, Arizona law identifies refusing to pay a claim without conducting a reasonable investigation based on all available information as an unfair claim settlement practice.

Keeping records of what you submitted and when you submitted it can help show whether the insurer had important evidence before it denied or reduced your claim.

They Failed To Follow the Terms of Your Policy

Your insurance policy sets out the coverage and benefits your insurer agreed to provide. If the insurer refuses to pay benefits the policy requires, you may have a breach of contract claim.

Your policy may also require the insurer to follow certain procedures when handling claims or resolving disputes. That’s different from a bad-faith claim, which generally focuses on whether the insurer acted unreasonably while handling your claim.

What Happens If You Sue Your Own Insurance Company?

Suing your own insurance company generally means asking the court to enforce your rights under the policy and address losses caused by the insurer’s conduct. You’re not simply asking a judge to make an adjuster reopen your claim.

You may be asking the court to decide whether your policy covers the loss, whether your insurer wrongfully withheld benefits and whether state law allows you to recover additional damages.

Preparing To File a Lawsuit

Before filing a lawsuit, you may need to review your policy, claim records, denial letters, settlement offers and communication with the insurer. Looking at these records can help clarify what the insurer decided, why it made that decision and what part of the dispute may need to be addressed.

Your policy may also require you to use an appeal, arbitration or another dispute process before or instead of filing certain claims. You’ll also need to account for any deadlines that could affect your ability to take legal action.

Filing the Lawsuit

After you file a lawsuit, your insurer can respond to your allegations. You and the insurance company may then exchange documents and other evidence through the discovery process.

Filing a lawsuit doesn’t necessarily mean your case will go to trial. You can continue settlement negotiations while the case moves forward, and the information uncovered during the lawsuit may affect those discussions.

Recovering Compensation

What you may recover depends on the type of legal claim you bring and the law in your state. Bringing a breach of contract claim may allow you to seek benefits that the insurer should have paid under your policy.

If you prove a separate bad-faith claim, state law may also allow you to seek additional damages tied to the insurer’s conduct. The damages available can vary based on the facts of your case and the law that applies.

Resolving the Lawsuit

Reaching a settlement can end the case before trial. A settlement may provide payment in exchange for resolving the dispute between you and the insurer.

If you and the insurance company can’t reach an agreement, a judge or jury may decide the legal issues and damages. What happens if you sue your own insurance company ultimately depends on your policy, how the insurer handled your claim and the law in your state.

Talk to a Lawyer Before You Sue Your Own Insurance Company

If you’re dealing with a serious dispute over accident-related insurance benefits, Sargon Law Group can review your policy, the insurer’s explanation and the evidence connected to your claim. Our firm represents injured people in Arizona, California and Colorado and can help you understand how an insurance dispute may affect a related personal injury case.

Considering whether to sue your own insurance company may require you to sort through both contract terms and state insurance law. Sargon Law Group can explain the legal options that may apply to your situation and help you deal with insurers as part of a personal injury matter.

To discuss your claim and possible next steps, request a free consultation with a personal injury attorney at Sargon Law Group.