Can a Customer File a Lawsuit Against an Insurance Company?

Insurance Company Lawsuits

Many people are not aware that under certain situations, they can file a lawsuit against their insurance company. The following is a brief overview of when and how this process works. For more detailed information and to find out how we can help, contact an insurance litigation attorney.

The following are some of the more common reasons why customers sue insurance companies.

Breach of Contract

Your insurance policy is a contract between you and the insurance company. The terms of the policy are just as legally binding as the terms that are in any other contracts between the two parties. If the insurance company fails to follow the terms of the policy/contract, then the customer can file a claim for breach of contract. In this situation, it is the failure to pay the customer damages for their losses, just as the policy/contract stipulates.

When a customer files a lawsuit against their insurance company, the court will examine the insurance policy to determine if the company breached the terms of the policy. Damages usually depend on the state you live in. In the majority of situations, damages are limited to the value of the policy. The court may also award the customer any legal fees and other expenses the customer had to pay to bring the lawsuit forward.

Bad Faith

In some states, the court may also award additional damages if the insurance company breached the policy/contract in bad faith. The definition of bad faith in this situation is when the insurance company failed to make reasonable efforts to provide the customer with compensation. In some cases, the court will not only award the actual damages the customer lost, but may also award damages for emotional distress and punitive damages against the company.

Low-Ball Settlement

Another tactic the insurance company may take in order to fully honor the policy/contract is to agree to pay the customer a settlement amount in order to avoid trial, however, the amount they are offering is not even close to the amount of damages the customer had endured. A customer can sue the company for the difference of what the company paid and what they should have paid.

Denial of Claim

If your insurance company denies your claim or they fail to defend you (if you are the at-fault party), you may be able to file an insurance litigation lawsuit against them since these are also failing to abide by the terms of the insurance policy.

Contact an insurance Litigation Attorney

If you have filed a claim with your insurance company and they refuse to honor your policy, it is crucial to your case to find a bad faith litigation lawyer who is not only a skilled negotiator but is also an experienced and aggressive litigator who will take your case to trial if the insurance company fails to negotiate in good faith. Call a law office today to schedule a free case evaluation with an insurance litigation attorney.