When Can You Sue Car Insurance Company? Find Out Now

Image Source: jknylaw.com

When Can You Sue Car Insurance Company? Find Out Now

Yes, you absolutely can sue a car insurance company, but you cannot sue them just because you are unhappy with their offer or service. You can sue a car insurance company mainly when they act unfairly, break their contract with you, or handle your claim in bad faith after a car accident. Suing is usually a last step when other ways to fix a problem, like talking or making a complaint to the state, have not worked. This long look will help you know when and why you might need to take this step.

Reasons You Might Sue Your Insurance Company

Most times, you expect your car insurance company to help you after an accident. You pay them to protect you. But sometimes, things go wrong. The company might not pay for damage or injuries. They might offer too little money. Or they might take too long. When they do not meet their duties, you might have a reason to sue.

Here are the main reasons someone might sue their car insurance company:

• They break the insurance contract.
• They handle your claim unfairly or in “bad faith.”
• They do not protect you when someone else claims you caused their injury or damage.

Let’s look at these closer.

When the Insurance Company Breaks Its Promise

Your insurance policy is a contract. It is a legal paper saying what the company will do for you and what you must do (like pay your bill). If the company does not do what the contract says, they have broken the contract.

Examples of breaking the contract include:

• Not paying a claim that your policy clearly covers.
• Not defending you in court if the policy says they will, and you are sued over an accident.
• Not following the rules laid out in the policy terms.

If the company breaks the contract, you can sue them for this breach. This means you ask a court to make the company follow the contract or pay you for the loss caused by them breaking it.

Dealing with a Bad Faith Insurance Claim

This is a big reason people sue insurance companies. “Bad faith” means the insurance company did not act honestly or fairly in dealing with your claim. Insurance companies must handle claims in good faith. They must investigate claims fully and try to pay valid claims quickly and fairly.

What makes a claim handled in bad faith? It is more than just being slow or making a mistake. It means the company knew they should have paid or handled the claim differently but chose not to, often to save money.

Here are signs of a Bad faith insurance claim:

• Not looking into your claim properly: They must check all the facts. If they do not gather needed info or ignore proof you give them, it could be bad faith.
• Wrongfully denying your claim: They deny your claim without a good reason based on the policy or the facts. This is a common sign of a wrongful Insurance claim denial.
• Offering much less than your claim is worth: They know your loss is $10,000 but only offer $2,000, hoping you will just take it.
• Taking too long: They delay looking into or paying your claim for no good reason. State laws often say how fast they must act.
• Not telling you why they denied your claim: They must give you a clear reason for saying no.
• Threatening you: They might try to pressure you to accept a low offer or drop your claim.
• Changing the reason for denial: They first say one thing, then change it later when you show proof they were wrong.
• Not defending you when they should: If someone else sues you after an accident, your insurance company might need to defend you and pay for your lawyer. If they do not, it can be bad faith.

Suing for bad faith is different from suing for breaking the contract. If you win a bad faith lawsuit, you might get more money than just the amount of your claim. A court might also make the company pay extra money as a penalty for acting so badly. This extra money is often called punitive damages. It is meant to punish the company and stop them and others from doing the same thing again.

Unfair Claims Practices Explained

Most states have laws that list specific actions insurance companies cannot take when handling claims. These are called Unfair claims practices acts or laws. These laws define what is considered unfair behavior. If an insurance company breaks these laws, it can be proof they acted in bad faith.

Examples of Unfair claims practices often listed in state laws include:

• Not paying claims quickly when it is clear they owe the money.
• Not having good ways to handle claims.
• Not approving or denying claims within a set time after you give them everything they need.
• Forcing you to sue to get the money they owe you by offering much less than the claim is worth.
• Making you fill out many forms that ask for the same info over and over.
• Not telling you about all the things your policy covers.
• Trying to settle a claim for less than a person knows they are owed because they are hurt and need money fast.

If you think your insurance company is doing any of these things, they might be breaking your state’s laws on Unfair claims practices. This gives you a strong reason to fight back and possibly sue them.

What Leads to an Insurance Claim Denial and When Can You Sue?

An Insurance claim denial happens when the company says they will not pay for your loss. Sometimes, this is fair. For example, if your policy does not cover floods and your car is ruined by a flood, the denial is likely fair.

However, if the denial is wrongful, you might sue. A denial is wrongful if:

• Your policy does cover the loss, but the company says it does not.
• The company did not look into the claim enough before denying it.
• The company uses a small detail or confusing part of the policy to avoid paying, even though the main loss is covered.
• The denial is based on wrong facts or a misunderstanding of the accident.

If your claim is denied, the first step is to ask the company why in writing. They must tell you the reason. If their reason seems wrong, based on your policy and the facts, you might dispute it. This leads to Insurance dispute resolution.

The Path Before Suing: Insurance Dispute Resolution

You do not usually start by suing. There are steps you must take first. These steps are part of Insurance dispute resolution. They aim to fix the problem without going to court.

Steps you might take:

1. Talk to the Adjuster’s Boss: If you disagree with the Insurance claim denial or offer from the Suing insurance adjuster handling your case, ask to speak to their supervisor or manager. Explain your case and why you disagree.
2. Write a Demand Letter: Send a formal letter to the insurance company. Explain the accident, your injuries or damages, why you believe your claim is valid, and what you think they should pay. Include copies of evidence (police report, photos, repair estimates, medical bills).
3. Ask for Internal Review: Many companies have a process to review a denied claim. Ask for your claim to be reviewed by a different person or team within the company.
4. File a State Insurance Department Complaint: You can report the company to your State insurance department complaint section. This government office watches over insurance companies. They can look into your complaint and see if the company broke any laws. They might not force the company to pay your claim, but they can make the company act correctly or face trouble with the state. This step is often needed before you can sue for bad faith in some states.
5. Mediation or Arbitration: Sometimes, you and the company agree to use a neutral person to help solve the problem. Mediation involves a neutral person helping you talk and find a solution. Arbitration involves a neutral person hearing both sides and making a decision. Your policy might even require arbitration.

If these steps do not work and the company still wonky pay fairly or denies your valid claim, then suing might be the next step.

Getting Ready for Automobile Insurance Litigation

When you sue, it is called Automobile insurance litigation. This means you are taking the insurance company to court. This process can be long and complex. It is very important to have a lawyer who knows about insurance law and car accidents.

What happens in Automobile insurance litigation?

1. File a Complaint: Your lawyer files papers with the court. These papers, called a complaint, explain who you are suing (the insurance company), what they did wrong (like Bad faith insurance claim, Breach of contract insurance, or Unfair claims practices), and what you want the court to make them do (pay you money).
2. Serve the Company: The company must be officially told they are being sued.
3. The Company Responds: The insurance company will file papers back, usually denying they did anything wrong.
4. Discovery: This is a key part. Both sides gather proof. Your lawyer will ask the company for papers, emails, claim notes, and might ask people involved (like the Suing insurance adjuster) questions under oath. The company will do the same to you. This is where evidence of bad faith or contract breaking is found.
5. Motions: Either side might ask the judge to make decisions on parts of the case.
6. Settlement Talks: Even while the court case is going on, lawyers for both sides will try to reach an agreement. This is Insurance settlement negotiation. Many cases settle before going to trial.
7. Trial: If you cannot agree, the case goes to trial. Both sides show their proof and talk to the judge or a jury. The judge or jury decides if the company did wrong and what they must pay.

Automobile insurance litigation takes time and costs money. Lawyers often work on a “contingency fee” basis in these cases. This means they only get paid if you win your case or reach a settlement. Their pay is a percentage of the money you get. This helps people who do not have money upfront to pay for a lawyer.

When the Insurer Ignores a Personal Injury Car Accident Claim

Suppose you were in a car accident that caused Personal injury car accident. The other driver was at fault. Their insurance company should pay for your injuries and damage. But what if your insurance company is involved?

Your own insurance company might get involved if:

• You have Uninsured/Underinsured Motorist coverage, and the at-fault driver has no insurance or not enough insurance.
• You have Medical Payments or Personal Injury Protection (PIP) coverage, which pays your medical bills no matter who was at fault.
• You are sued by the other driver, and your insurance company must defend you.

If your own insurer handles your claim for these coverages, they must act in good faith towards you. If they handle your claim for your injuries or damage in Personal injury car accident unfairly, you can sue them for bad faith or Breach of contract insurance.

What if someone else is suing you after an accident? Your insurance company has a duty to defend you and try to settle the claim within your policy limits if they can. If they fail to defend you properly, or refuse to settle a claim for a reasonable amount within your policy limits, and you end up having to pay more money out of your pocket, you might have a claim against your own insurer for bad faith. They should have protected you as their policyholder.

Decoding Breach of Contract Insurance in Simple Terms

Let’s look closer at Breach of contract insurance. Your policy is the contract. Both you and the insurer agree to do certain things.

Your duties usually include:

• Paying your premiums (your bills) on time.
• Telling the truth on your application.
• Reporting accidents and claims quickly.
• Helping the company investigate a claim (like giving them info or letting them see damage).

The insurance company’s duties usually include:

• Investigating claims in a timely way.
• Paying covered claims up to your policy limits.
• Defending you if you are sued over a covered accident.
• Acting in good faith towards you.

If the insurance company does not do one of their duties that is written in the policy, they might have committed Breach of contract insurance.

Example: Your policy says they will pay for damage if you hit an animal. You hit a deer. You file a claim. You pay your deductible. The company says they will not pay because “hitting animals is not covered.” But you read your policy, and it clearly is covered. This is a Breach of contract insurance. You can sue them based on the written terms of the contract.

Often, bad faith actions are also breaches of contract. For example, if the contract says they will defend you, and they refuse, that is both a breach of contract and potentially bad faith if their refusal is not for a good reason.

The Role of Insurance Settlement Negotiation

Before anyone sues, there is usually Insurance settlement negotiation. This is when you or your lawyer talk with the insurance company (often the Suing insurance adjuster or their supervisor) to agree on a amount of money to resolve the claim.

You present your case: how the accident happened, the damage to your car, your medical bills, lost wages, pain, and suffering. You show your proof. The insurance company looks at everything and makes an offer. You might make a counter-offer. This back and forth is the negotiation.

Negotiation is normal. Insurance companies rarely offer the top dollar right away. They expect you to negotiate.

When does negotiation fail and lead to a lawsuit?

• The company offers a amount that is much too low compared to your losses and refuses to offer more.
• The company denies the claim completely and refuses to negotiate at all.
• The company places unfair conditions on a settlement.
• The company delays negotiation for a long time.

If negotiation fails, and you believe the company is acting unfairly or breaking their promise, you can decide to sue. The lawsuit process itself involves more negotiation, often with the help of lawyers and possibly a mediator or judge pushing for a settlement before trial.

Reporting to the State Insurance Department Complaint

Before or even while you are thinking about suing, filing a State insurance department complaint can be a helpful step.

How does filing a complaint work?

• You contact your state’s department of insurance (or division, or office – the name changes by state).
• You fill out a form explaining your issue with the insurance company. You provide details about your claim, the company’s actions, and why you think they were wrong.
• You often send copies of your policy, letters from the company, and other related papers.
• The department will contact the insurance company and ask for their side of the story.
• The department reviews the case to see if the company followed state laws and rules for handling claims.

What can the state department do?

• They can make the insurance company explain their actions.
• They can tell the company if they broke a rule.
• They can fine the company or take other action against their license if they find a pattern of bad behavior.
• They can sometimes help you and the company talk to find a solution, but they usually cannot force the company to pay your claim amount. That power belongs to the courts.

Why file a State insurance department complaint?

• It is often free.
• It puts official pressure on the insurance company.
• It creates a record of the company’s actions, which can be useful if you do decide to sue later for bad faith.
• In some states, you must file a complaint with the state department before you can sue for bad faith.

It is a good step to consider if you hit a wall with the company, but remember it might not get you the money you want directly.

Can You Sue the Suing Insurance Adjuster?

Most times, you cannot directly sue the Suing insurance adjuster who handled your claim. The adjuster works for the insurance company. Their actions, even if unfair or wrong, are usually seen as the actions of the company they work for.

When you sue for bad faith or unfair practices, you sue the insurance company, not the individual adjuster. The company is responsible for how its employees, including adjusters, handle claims.

However, the adjuster’s words, notes, emails, and decisions are key proof in a lawsuit against the company. Their actions will be examined closely to see if the company acted in bad faith. So, while you do not sue the adjuster’s name, their conduct is central to your case against the company.

There are very rare cases where an adjuster might be sued for extreme actions like fraud, but for typical claim disputes or bad faith, the lawsuit is against the insurance company itself.

Types of Money You Might Get When You Sue

If you sue and win, what kind of money might you get?

1. Compensatory Damages: This money pays you back for the actual losses you suffered that the insurance company failed to cover.

   • Money for car repairs or the value of your totaled car.
   • Money for medical bills from your Personal injury car accident.
   • Money for lost wages because you could not work.
   • Money for pain and suffering (in personal injury cases or sometimes as part of bad faith damages).

2. Damages for Breach of Contract: If you sue just for Breach of contract insurance, you usually get the money the company should have paid under the policy.

3. Damages for Bad Faith: If you sue for and win a bad faith claim, you can often get more than just the policy amount.

   • The money the company owed you on the original claim.
   • Money for other harm caused by the bad faith (like extra costs you had because they did not pay, or emotional distress).
   • Punitive Damages: This is the extra money meant to punish the company for really bad behavior and stop others from doing it. Punitive damages are not given in every bad faith case, only when the company’s actions were especially awful or reckless.

Winning a bad faith case can result in getting much more money than the limit of your insurance policy. This is because the lawsuit is not just about the original claim amount, but about the company’s wrongful conduct in handling your claim.

When to Get a Lawyer

Thinking about suing your car insurance company is a big step. It means you have a serious problem. Getting a lawyer is almost always needed if you are considering filing a lawsuit for bad faith or Breach of contract insurance.

A lawyer can help you:

• Figure out if you have a strong case for suing.
• Understand the complex laws about insurance and bad faith in your state.
• Gather the right proof (like the company’s internal files).
• Handle all the legal papers and court rules.
• Negotiate with the company’s lawyers.
• Represent you in court if needed.

Trying to sue a large insurance company on your own is very hard. They have many lawyers working for them. A lawyer on your side can level the playing field. Many lawyers who handle these cases give free first meetings to talk about your situation. Do not hesitate to call one if you think your insurance company is treating you unfairly after an accident or claim.

Table: When You Might Sue vs. When You Might Not

Situation	Can You Likely Sue?	Why?	What to Do Instead?
Insurance Claim Denial (Wrongful)	Yes, for breach of contract or bad faith.	Company denied a valid claim under your policy.	Internal review, State complaint, Dispute.
Bad Faith Insurance Claim Handling	Yes.	Company acted unfairly, delayed, lied, or didn’t investigate fully.	State complaint first (maybe required).
Breach of Contract Insurance	Yes.	Company failed to do something the policy clearly says they must.	Try resolving with company first.
Unfair Claims Practices by the company	Yes, this behavior supports a bad faith lawsuit.	Company broke state rules on how to handle claims.	State complaint is key proof.
Low Insurance Settlement Negotiation Offer	Maybe, if the offer is so low it shows bad faith.	Company is making a clearly unreasonable offer to pressure you.	Counter-offer, provide more proof.
Delays in Handling Claim	Maybe, if delays are long and without reason.	Company is stalling to avoid paying or hoping you give up.	Ask for timeline, State complaint.
Unhappy with standard customer service	No.	Being slow or making a small mistake is not usually bad faith.	Talk to supervisor, write a letter.
Claim denied because it’s not covered	No.	Policy terms do not cover the type of damage or event.	Review your policy carefully.
Claim amount is less than your deductible	No.	Insurance only pays amounts over your deductible.	Pay for repairs yourself.

More About the Process of Suing

Taking an insurance company to court is a step-by-step legal process. It requires proof. You must show that the company did not act correctly and that their actions caused you harm (like not getting your car fixed, not getting medical bills paid, or having to pay money out of pocket).

Proof can include:

• Your insurance policy papers.
• Letters, emails, and notes between you and the company.
• Recordings of phone calls (if your state allows you to record).
• The company’s internal claim file notes (your lawyer can often get these).
• Expert opinions (like a mechanic saying repair costs are fair, or a doctor about your injuries).
• Witnesses (like someone who saw the accident or heard talks with the adjuster).

The insurance company will have its own proof and reasons for why they acted as they did. They will try to show they were fair and followed the rules. This is why having a lawyer who knows how to find and use the right proof is so important.

Avoiding the Need to Sue

While this article is about when you can sue, it is also wise to try to avoid needing to sue if possible.

Tips to handle your claim well from the start:

• Read your policy! Know what it covers and what it requires you to do.
• Report accidents quickly.
• Be honest and give accurate information.
• Keep copies of everything. Every letter, email, note about phone calls, photo, bill, and form.
• Be clear and calm when you talk to the adjuster. Write things down after calls.
• If you disagree with the adjuster, ask for the reason in writing.
• If you feel you are being treated unfairly, do not wait too long to get advice from a lawyer or file a State insurance department complaint. There are time limits (statutes of limitations) for filing lawsuits.

By being informed and organized, you give yourself the best chance to get your claim paid fairly without needing to go to court. But if the company acts in bad faith, knowing your rights and when you can sue is powerful.

Frequently Asked Questions (FAQ)

H5 Can I Sue My Insurance Company Just Because My Claim Was Denied?

No, you cannot sue just for a denial. A denial must be wrongful. This means the company denied a claim that should have been paid under your policy terms, or they denied it after acting in bad faith (like not investigating properly).

H5 What Is “Bad Faith” Exactly?

Bad faith means the insurance company did not handle your claim honestly and fairly. They might have delayed without cause, failed to investigate, offered far too little, or wrongly denied a valid claim to save money or for reasons not allowed by law or the policy.

H5 How Long Do I Have to Sue My Insurance Company?

There are time limits, called statutes of limitations. These vary by state and depend on whether you are suing for Breach of contract insurance, Bad faith insurance claim, or for injuries from the accident itself (Personal injury car accident). These limits are often between 1 to 6 years, but it is vital to check your state’s specific law or ask a lawyer right away. Do not wait!

H5 What Proof Do I Need to Sue for Bad Faith?

You need proof the insurance company acted unfairly or broke their contract. This includes your policy, all communications (letters, emails, call logs) with the company, their reasons for denial or low offers, their internal claim file notes, and proof of your losses.

H5 Will Suing My Insurance Company Make My Rates Go Up?

It is against the law in many states for an insurance company to raise your rates or cancel your policy just because you filed a claim or inquired about a claim. Suing for bad faith is about their conduct, not usually the accident itself. However, simply having an accident can affect your rates, depending on who was at fault and your policy history. Suing specifically for bad faith is unlikely to be a direct reason for a rate hike related to that claim, but discussing this concern with a lawyer is wise.

H5 Can I Sue the Other Driver’s Insurance Company?

Usually, you cannot sue the other driver’s insurance company directly for bad faith in handling your claim (a “third-party” claim). Their duty of good faith is to their policyholder, not to you. If the other company is treating you unfairly, you typically sue the at-fault driver, and their insurance company must defend them and pay if you win (up to the policy limits). However, if your own insurance company is involved (e.g., through Uninsured Motorist coverage or if they fail to protect you from the other party’s claim), you can sue your company.

H5 What Is the Difference Between Breach of Contract and Bad Faith?

Breach of contract insurance is when the company simply did not follow the written rules in the policy. Bad faith insurance claim is when the company acted dishonestly or unfairly in how they handled the claim, which often includes breaking the contract but adds a layer of wrongful motive or behavior beyond just failing to pay. Bad faith can lead to bigger penalties like punitive damages.

H5 Do I Need a Lawyer to File a State Insurance Department Complaint?

No, you do not need a lawyer to file a State insurance department complaint. It is a process designed for consumers to use on their own. However, if your problem is complex or severe, discussing it with a lawyer first can help you decide if filing a complaint or suing is the best path.

Final Thoughts

Dealing with car insurance companies after an accident can be stressful, especially if they deny your claim or offer less than you need. While most claims are handled correctly, sometimes companies fail to meet their duties. Knowing your rights is key. You can sue your car insurance company, especially for Bad faith insurance claim or Breach of contract insurance, when they act unfairly or break their promises. This is a serious step and usually follows other attempts at Insurance dispute resolution, like talking with the company or filing a State insurance department complaint. Getting advice from a lawyer experienced in Automobile insurance litigation and Personal injury car accident cases is highly recommended to help you understand your options and fight for fair treatment. Do not let an unfair Insurance claim denial or Unfair claims practices stop you from seeking the money you are owed.