When It Is Permissible to Sue
In general, most lawsuits against an auto insurance company stem from public policy that requires insurance companies to treat their insureds fairly and in good faith. For example, your insurance company generally must investigate fully a claim you made before denying it. If your insurance company either (1) denied coverage or did not pay your claim, or (2) delayed the investigation , there is a possibility you can sue your auto insurance company if you think the denial or delay was improper. For example, the basis for a lawsuit against your auto insurance company is fairly common and arises when there is a wrongful denial of coverage and bad faith. A wrongful denial of coverage is where your auto insurance company has no reasonable basis to deny coverage. A bad faith claim arises when the conduct of your auto insurance company has been malicious or intentional.
Legal Ways to File a Lawsuit
You have legal grounds to sue your auto insurance company based on a breach of contract. Financial recovery might be possible based on the terms of your insurance coverage and what damage you have suffered as a result from the initial claim denial. If the auto insurance company has engaged in bad faith practices, there may be grounds for additional financial recovery as well. A breach of contract occurs when the insurance company does not live up to the terms outlined in your insurance policy. For example, your original insurance policy may have stated that a certain dollar amount would be covered if your car was stolen. If your insurer denies your claim, this constitutes a breach of contract. Negligence might also occur if the auto insurance company has made an error. Negligence can also occur if the insurance adjuster did not research damages properly. Bad faith is when an auto insurance company is intentionally deceptive or otherwise dishonest to avoid paying an insured. Insurers are expected to act in good faith with their customers. Filing a claim that is denied based on bad faith practices may permit larger financial compensation.
Before You Sue, Take These Steps
Aside from gathering proof of damage and determining whether or not you have uncovered any policy exclusions, you should do your due diligence by carefully reviewing your auto insurance policy. You should have some results within a month of filing your claim and preferably, a reason for your denial within two weeks. If you do not, there is something wrong with the insurance company’s procedures. Most insurance companies will send you a form letter denying your claim. Use it to open a file in which you gather your policy, your claim file, your payment history, any letters you received from your insurance company, any documentation that verifies your damage and finally, the insurance adjuster’s report. This information will be important to bring to an attorney meeting.
If you are forced to hire an attorney to handle your case, he or she may want to argue your case before a mediator or in binding arbitration. A mediator is an objective third party who listens to both sides in a dispute, evaluates the arguments and then offers a solution for both sides. The solution offered by the mediator is not legally binding but if you and your insurance company accept it, it will have the effect of a legal order. The mediator may suggest a dollar amount in damages or the approval of a particular medical procedure. Binding arbitration is less formal than a trial and acts like a judge in a courtroom. He or she will consider all of the evidence submitted by both you and the insurance adjuster and then make a legally binding determination as to the outcome of your case. It is more difficult to appeal that decision than a court order.
Should You Get an Attorney
We understand that prospective clients are often hesitant to hire an attorney, especially if you have never hired an accident or injury lawyer before. Additionally, we realize how expensive it may be to hire a lawyer, which prevents you from hiring a lawyer who you think you need or might need.
Therefore, we want to be clear on our philosophy and approach to offering representation in these types of cases. We offer free consultations and case evaluations.
In order to evaluate whether we will assist you with your case, we will ask you a few questions and then spend a few minutes reviewing your case with you. If we believe that you have a case, and would benefit from attorney involvement, we will advise you and discuss next steps.
If you have an insurance policy and the other driver caused damages, there is a good chance that you will be able to recover money from the at fault driver’s insurance company for damages.
If the other driver caused damages and you do NOT have an insurance policy, you likely will not have any recovery for damages without the other driver’s insurance company. We can assist you, if you are in this situation.
If people were injured in the wreck, you may have additional claims.
Overall, insurance claims, damages caused from an accident, and potential legal liability can be complex and different depending on the circumstances of your case. Be sure and discuss these issues with your insurance agent, and thereafter bring us as your legal counsel, so we can assist you with your case.
As a client of our firm, you will definitely be represented by an attorney. We cannot provide advice and representation without retaining attorneys in our law firm. You are always eligible for consultation with an attorney in our firm, and we will likely handle your case within our law firm.
Almost every insurance claim (including all claims listed above) can be resolved without needing to file a lawsuit.
Most likely, your insurance company will negotiate with the at fault insurance company and will obtain compensation for your damages. Further, if you have filed the property damage claim with your insurer, your insurer will quickly and promptly investigate the claim and send a subrogation demand, which is the claim against the other driver’s insurance to obtain compensation for your damaged car or vehicle.
Most insurance claims do not end up as lawsuits, and most insurance claims do not end up needing a lawsuit to ensure you receive compensation.
For example, in a typical minor car accident (where no one is hurt), the at fault driver’s insurance company handles the property damage and there is no need for you to make any calls. If you have your own insurance, you call your insurance company to report the claim and they investigate and are in contact with the at fault driver’s insurance carrier.
In a typical minor accident, your auto insurer handles everything and you do not have to go to court or file a lawsuit to receive full compensation.
Unfortunately, in a serious injury or death case, or if your damages do not seem to be covered, or the insurance company is denying low offers, or you cannot get a response from the insurance adjuster, or you want to file suit – you may need to hire an attorney.
Almost all cases return compensation, even without a lawsuit. If you are not receiving reasonable compensation and you want the assistance of a lawyer, it may be time to reach out to a qualified injury and accident lawyer.
Generally speaking, most of the time you do not need an attorney. However, if your claim against the other driver is denied, if you are receiving low medical payments without any communication about your property damage, if you want more answers and clarity on the ongoing property damage and injury claim and possible lawsuit, if you have major questions for your agent about your coverage and information, if you need to understand your rights and how the process should work (and it is NOT working for you), or if you simply need more answers than your insurance agent can provide – you may want to hire a lawyer.
For some complicated claims, with major damages, or other special circumstances, you may need to hire a lawyer at the outset. Each case is unique and we are happy to help you understand your current status, the steps required, and whether you need a lawyer, or not.
If you need to hire a lawyer for any reason, you will have independent representation by the attorney of your choosing at the onset of the case. The attorney you retain will likely handle your case from inception to resolution.
What Happens When You Sue
You’ve decided to sue your auto insurance company. Now what? You might be surprised at what the lawsuit process entails for you. The discovery process can be lengthy, but is also the best way to discover the amount your insurance company owes you. Depending on how organized your files are, gathering what your attorney needs can take quite a while. Then, there’s the negotiations.
While your attorney will handle most of the communication when preparing for the lawsuit, it’s still possible that your insurance company will try to reach out to you. Listen to your attorney’s instructions and don’t give in to those calls or email messages, as it could jeopardize your case.
In general, there are five stages of a lawsuit against your insurance company. If not, there may be a power imbalance and unequal footing between you and your insurance company that can contribute to an unfair outcome. Your attorney will be familiar with the law and understand how to use it to his or her (or your) advantage. You should also listen to your attorney’s advice because he or she will know your case, including your best chance for winning and losing, better than you will, particularly in terms of the potential outcome of each step of a lawsuit. The first stage of a lawsuit is known as the "discovery" phase. Discovery is the pre-trial process in which both parties gather basic information about the case. There are several different ways your attorney can gain this information, including: Some or all of these stages can last months . Your attorney should keep you updated throughout the discovery process. At some point, though, your attorney may recommend that you agree to an amount of settlement, which means you receive the payment without needing to go through the trial.
Nearly all cases involving lawyers involve negotiations. The negotiations for a lawsuit against your auto insurance company are slightly different from those of a lawsuit for other reasons. Your auto insurance company will likely want to negotiate before the lawsuit even begins. The trouble with this is that you often need to go through the discovery process. Your auto insurance company wants a pressured negotiation so they can avoid spending money on legal fees and the worst possible fate, a jury trial. A court date will usually be set so that the two parties can try to resolve the issue. If they cannot, then the two parties are separated into two rooms and a judge or jury decides the verdict. If both sides are in agreement, it is possible that the case may never make it to court. Your attorney will continue to work on behalf of your interests up until a trial has begun.
Also keep in mind that, until the trial is complete and the verdict has been reached, your insurance company still has time to settle. If the two parties can agree, the trial may be avoided altogether. Again, this can take months. It may feel like it is never going to end, but it will. If you win, you will receive the settlement you have been waiting for. If you lose, you might still be able to negotiate.
What Issues May Arise
The most common hurdle courts seek to avoid if you try to sue your insurance company is whether or not the insurance company acted in "bad faith." The insurance company has very strict contractual obligations to pay the claims it is contracted for. If the company does not pay, this would probably constitute a breach of contract with the particular policy you hold. However, proving bad faith with an insurance carrier is extremely difficult. In order to prove bad faith, you must show that the carrier administered your claim with gross negligence or an intentional disregard for the risk of harm to the insured. The needs of the plaintiff will try to subvert the contract that you have with your insurance company by trying stage an emotional appeal to the jury. However, the court will likely not allow this type of evidence to be submitted because they want to avoid blaming the victim of a car accident. The most common defense is that the insurance company reached a reasonable conclusion based on the evidence they had at their disposal and that nothing improper was done. The insurance company will claim that when they made their offer to settle they were fulfilling their contractual obligations. It is important that if you try to sue your insurance company to attempt to resolve the issue through mediation or arbitration first. That way the court will agree that the plaintiff made every effort to settle the issue through good-faith negotiation and will not see the case as an attempt to shake down the insurance company.
Alternatives to Suing Your Insurance
Not all cases are destined to end up in the court system. Auto insurance companies understand this; they have entire departments of "resolvers" whose job it is to keep you out of court, so that they do not have to open their checkbooks to pay your claim or let a jury determine what your past and future medical treatment costs will be. Here are some alternatives to court: Mediation. In mediation, your case will often be assigned to a mediator who will then meet with both parties (or their lawyers) separately. The mediator will then evaluate the strengths and weaknesses of both sides and attempt to find a middle ground where the auto insurance company will pay more money than they wish to pay, and you agree to accept less than you ask. This may or may not work, and you may not be interested in it. Mediation is non-binding, meaning any party can reject the offers that are made in mediation. Further, if your case fails mediation, you can still proceed with litigation. Arbitration is similar to mediation but is binding . Essentially, arbitration is a mini-trial where one or more "arbiters" acts as a judge and decides the merits of the case. The process allows each side to testify and present evidence, and then the arbitrator decides who the winner is. Arbitration is not formally a lawsuit, and is said to have a less adversarial atmosphere than litigation. But therein lies the rub – because it does not have the same protections as an official lawsuit (such as discovery), it is often harder for either party to "lay the cards on the table," and thus hard to get a fair shake. If you go to arbitration, you have to be willing to live with the decision whether favorable or not – you cannot appeal it. Insurance Regulator. Every state has an insurance regulator (also known as the Division of Insurance or Department of Insurance.) They investigate complaints against insurance companies and have the authority to levy heavy fines if they find fault. If you ever feel you are mistreated by an insurance company, you can file a complaint with the State’s Department of Insurance and, possibly, get results.