Can You Sue Your Auto Insurance Company? Things Need to Know

Having car insurance is an important part of being a sensible car owner. Not only do you have to follow the law, but you also have to protect yourself, your guests, and other people on the road. Buying car insurance is like signing a deal with the company. In exchange for your premiums, they promise to cover your car.

However, policyholders and insurance companies can disagree, which brings up the question: Can I sue my car insurance company?

This piece will go over all the situations in which you can sue your car insurance company. We will talk about law ideas, common reasons to sue insurance companies, and the steps you need to take to make a claim against your insurer.

Table of Contents

Can You Sue Your Auto Insurance Company?

People in the US can sue their car insurance companies for a number of reasons, such as:

1. Bad faith denial or delay of claims

Claim denial or delay in bad faith is one of the main reasons people sue their car insurance companies. If an insurance company handles a claim in an unfair way, like by denying a legal claim for no good reason or delaying payment of a claim for no good reason, this is called bad faith.

2. Underpayment of claims

People who have car insurance can also sue their companies if they don’t pay their claims in full. If the insurance company doesn’t pay the full amount of losses covered by the policy or makes a low offer to settle the claim, this could happen.

3. Unfair ways of dealing with claims

People who have car insurance can also sue their companies for unfairly handling claims. These could be things like:

Not looking into claims quickly
Getting policyholders to agree to agreements that aren’t fair
Giving false information about the insurance policy’s terms

4. Breaching the terms of the insurance deal

People who have car insurance can also sue their companies if they break the terms of their policy. This can happen if the insurance company doesn’t cover what the policy says it will cover or if it breaks any of the other terms of the contract.

When should you file a lawsuit against your car insurance policy?

You should be very careful about suing your car insurance company. Litigation can cost a lot of money and take a lot of time. But if you think your insurance company acted unfairly or broke your rights in some other way, you might want to file a case.

When choosing if to sue your auto insurance company, here are some things to think about:

Your case’s strength. Have you found proof that the insurance company was acting in bad faith or did something else wrong to back up your claims?
The possible harm. How much do you want in compensation?
The price of going to court. How much will it cost to have a hearing and hire a lawyer?

How to sue your auto insurance company

It’s the first thing you need to do if you want to fight your car insurance company. The report will list the things you say the insurance company did wrong and the money you want them to pay you.

The insurance company will have a chance to react after you file a complaint. The claim will move on to discovery if the insurance company doesn’t agree to settle. Getting proof from both sides of a case is called discovery.

The case may go to trial after discovery is over. The court will give you a ruling against the insurance company if you win the case. The insurance company will then have to pay you the amount of money the court said you were owed.

Advice on how to sue your car insurance company

Here are some things to keep in mind if you want to sue your car insurance company:

Keep accurate records. This includes everything you’ve written to the insurance company, your medical bills, and estimates of how much damage was done to your property.
Hire a lawyer. An car insurance lawyer with a lot of experience can help you build a strong case and get a fair settlement.
Get ready to fight for a long time. Most insurance companies have a lot of money and are ready to fight cases hard.

Claims made in bad faith by insurance companies

Here are some examples of insurance activities that are not in good faith and could lead to a lawsuit:

Being unwilling to pay a claim for no good reason
Not paying a claim when it should be paid
requiring too much paperwork or proof of loss
Getting the policyholder to agree to a deal that isn’t fair
Giving false information about the insurance policy’s terms
Not doing a fair investigation into a claim
Failure to get in touch with the insured on time
Using threats or fear to get an insured to settle a claim for less than what it’s worth

What kinds of damages can be gotten in a bad faith insurance case?

You might be able to get the following damages from your car insurance company if you are successful in your lawsuit for bad faith:

Your whole insurance claim amount plus interest
Damages to punish the insurance company for acting badly
damage for emotional distress, for the stress and worry you went through because of the insurance company’s bad behavior
Fees and costs for lawyers

How to prove bad faith in a lawsuit

If you are suing your car insurance company for bad faith, you will need to show that they handled your claim in a way that was not reasonable. To do this, the insurance company may need to show that:

Didn’t have a good reason to reject or delay your claim
Not properly looked into your claim
unfair methods to get you to agree to a fair deal
They lied about what your insurance policy covered.

Time limit for filing a case against an insurance company for bad faith

Laws about how long you have to file a claim for bad faith insurance vary from state to state. In most cases, though, it’s two to three years after the insurance company did something wrong.

If you want to sue your auto insurance company and have questions or concerns, you should talk to an experienced auto insurance lawyer.

How do some types of car insurance fraud look?

Trying to trick an insurance company into paying for a claim that isn’t real is called auto insurance scam. If someone steals your car insurance policy, it could be you or the insurance company.

Here are a few examples of fraud in car insurance:

Accidents that are staged happen when two or more drivers work together to make an accident happen so they can file insurance claims.
When an insured person lies about how bad their losses are in order to get more money from their insurance company, this is called “exaggerated claims.”
Someone makes a phantom claim when they think they have an accident that never happened.
VIN switching: This is when an insurance policyholder swaps their car’s VIN number with that of a lost car in order to get their insurance money.
When a customer lies to their insurance company to get a lower rate, this is called rate evasion.

Auto insurance fraud can cost both the insurance company and the client a lot of money. According to the Insurance Information Institute (III), car insurance fraud cost the average U.S. family $469 a year in higher premiums in 2021.

It is possible to report car insurance fraud to either the insurance commissioner in your state or the National Insurance Crime Bureau (NICB).

What role does car insurance play in accident lawsuits?

In a number of ways, car insurance coverage can change accident claims.

First, both the driver who caused the accident and the person who was hurt can get financial safety through car insurance. The driver who caused the accident should pay for the victim’s medical bills, property damage, and lost wages if they have liability insurance. This may keep the victim from having to sue the driver who caused the accident for damages.

Secondly, having car insurance can help settle accident claims more quickly and easily. Since the driver who caused the accident probably has liability insurance, their company will usually talk to the victim’s company to try to come to an agreement. In this way, a long and expensive hearing might not be necessary.

Third, car insurance may limit how much a victim of an accident can get in a case. Different states have limits on how much liability insurance cars need. This means that the victim might not be able to get back the full amount of their losses if they are more than the amount of money the at-fault driver is responsible for.

Fourth, a driver who was at fault may not have insurance or not have enough insurance, which can change the result of a lawsuit. Victims may need to file a claim under their own uninsured/underinsured motorist (UM/UIM) coverage if the driver who caused the accident doesn’t have insurance or doesn’t have enough insurance. Accident victims who are hurt by drivers who don’t have insurance or don’t have enough insurance may be able to get financial help through UM/UIM coverage.

Here are a few specific ways that car insurance can affect cases after accidents:

The victim may not have to go to court if the driver who caused the accident has liability insurance and their insurance company gives a fair settlement.
The victim may have to file a lawsuit to get their full damages back if the driver who caused the accident has liability insurance but their insurance company won’t offer a fair deal.
The victim may need to file a claim under their own UM/UIM coverage if the driver who caused the accident doesn’t have insurance or doesn’t have enough insurance.
Even if the victim wins their case, they might not be able to get back the full amount of their damages if the at-fault driver’s liability coverage is less than what they need.

Insightful: Laws about car insurance are various in every state. Because of this, you should talk to a lawyer about the rules in your state and how they might affect your accident lawsuit.

In the End

Policyholders can sue their car insurance companies if they deny or delay claims in bad faith, pay claims too little, handle claims unfairly, or break the insurance contract. However, going to court can cost a lot of money and take a lot of time, so you should carefully think about your options before you file a case. If you decide to sue, you should keep good records and get help from a car insurance lawyer with a lot of experience.

FAQs

Here are some questions that people often have about suing car insurance companies:

Q: Why would I want to sue my car insurance company?

A: Some good reasons to sue your car insurance company are:

Recovering the full amount of your insurance claim, plus interest
Punishing the insurance company for its bad conduct
Getting compensation for mental distress
Recovering your attorney’s fees and costs

Q: What are the risks of suing my auto insurance company?

A: Here are some of the risks of suing your car insurance company:

Having to pay the insurance company’s lawyer’s fees and costs because they lost the case
Spending a lot of money on lawyers, even if you win the case
Going through a stressful and long court case

Q: How can I increase my chances of winning a bad faith insurance lawsuit?

A: If you want to improve your chances of winning a bad faith insurance case, do the following:

Get as much proof as you can to back up your claims of bad faith. This might include letters from the insurance company, medical bills, estimates of how much damage was done to the property, and statements from experts.
Hire a lawyer who has experience with car insurance. You can build a strong case and get a fair deal with the help of a lawyer.
Be ready to talk things over. It’s possible that the insurance company will agree to pay less than what you’re claiming. You should be ready to leave the table of negotiations, though, if the insurance company won’t offer a fair deal.

Q: What should I do if I am considering suing my auto insurance company?

A: If you want to sue your car insurance company, you should

Gather all of your evidence and documentation.
Consult with an experienced auto insurance attorney.
Be prepared to negotiate.
Be patient. Litigation can be a slow process.

Q: What is the average settlement amount in a bad faith insurance lawsuit?

A: The typical payout amount in a case of bad faith insurance is not the same for every case. In general, though, it’s between $10,000 and $100,000.

Q: What is the success rate of bad faith insurance lawsuits?

A: Lawsuits against insurance companies for bad faith have a pretty high success rate. One study says that policyholders win around 70% of cases against bad faith insurance companies.

Q: How long does it take to resolve a bad faith insurance lawsuit?

A: A bad faith insurance case can go on for months or even years before it is over. The time it takes to settle will rely on a lot of things, like how complicated the case is, how busy the court is, and how willing both sides are to settle.

Q: What are some of the challenges involved in suing an auto insurance company?

A: Some of the problems that come up when you try to sue an auto insurance company are:

Insurance companies are very wealthy and can hire very good lawyers.
Insurance companies may try to drag out the lawsuit process to make the customer lose patience.
Some insurance companies will go to court and try to force the insured to settle for less than the full value of the claim.

Q: What should I do if I am contacted by an insurance adjuster after I have filed a claim?

A: You should be polite and helpful if an insurance adjuster calls you after you’ve made a claim. You shouldn’t give the claimant more information than they need, though. Also, you shouldn’t sign anything until you’ve had a lawyer look it over.

Q: What are some common defenses that insurance companies use in bad faith lawsuits?

A: When they are sued for bad faith, insurance companies often use the following defenses:

The insurance company dealt with the claim in a reasonable way.
The client did not give the insurance company enough details about the claim so that they could look into it.
The policyholder did not help the insurance company with their research.
Damages done to the policyholder were not caused by the covered event.
The insured could not make a claim because the time limit had passed.

Q: What are some of the factors that a court will consider in determining whether or not an insurance company acted in bad faith?

A: These are some of the things a court will look at to decide if an insurance company acted in bad faith:

How the insurance company handles cases.
The way the insurance company talks to the client.
The reasons the insurance company gave for not paying or delaying the claim.
How the insurance company looked into the claim.
The insurance company’s offer to pay.

Q: Can I sue my auto insurance company for emotional distress?

A: You might be able to sue your car insurance company for emotional distress if their actions in bad faith caused you a lot of emotional pain. It’s important to keep in mind, though, that damages for emotional distress are hard to get back in bad faith insurance cases.

Q: What are some tips for preparing for a bad faith insurance lawsuit?

A: Here are some things you can do to get ready for a bad faith insurance case.

Get all of your proof and paperwork together, such as letters you’ve sent to the insurance company, medical bills, estimates of how much damage was done to your property, and expert statements.
You should be ready to talk about your case in length with your lawyer.
You will likely be asked about your damages, such as your medical bills, lost wages, and mental pain.

Q: What should I do if I receive a settlement offer from my auto insurance company?

A: If your car insurance company makes you a deal offer, you should have a lawyer look it over before you accept it. You can talk to your lawyer about whether the deal is fair and reasonable.

Q: What is it called when an insurance company refuses to pay a claim?

A: A rejection of claim is what an insurance company says when they don’t want to pay a claim. Several things can cause this to happen, including:

The policy does not cover this claim.
The client did not give the insurance company enough details about the claim for them to look into it.
The policyholder did not help the insurance company with their research.
It’s thought by the insurance company that the claim is false.

If your insurance company turns down your claim, you can file an appeal. First, talk to your insurance agent or claims adjuster about the rejection. You can make a complaint with your state’s insurance commissioner if you are still unhappy with the insurance company’s decision. Another option is to go to court and sue your insurance company.