How to sue an insurance company?

by ty_ger88 » Fri Sep 14, 2007 02:20 pm

Many a times you may be unhappy with your insurance company for not paying you your dues or for delaying your payments or for any other reason. Your insurance company does not always have the upper hand. There are laws to protect you if you have a dishonest insurer.

When can you sue your insurance company?

You can sue your insurance company on grounds of:
  • Bad faith and
  • Breach of contract

If your insurer tries to trick you by not paying up a legitimate claim you can put up a civil suit against the company for having acted in bad faith. A company shows bad faith when it unreasonably denies a legitimate claim. This may mean that:
  • The company has failed to carry out proper investigations
  • Undue delay in processing a claim
  • Disregarding the rights of the policyholder
  • Inadequate compensation provided against claim filed

You can sue your insurance company for the full amount of benefits that has been denied to you as well as for any economic loss or emotional distress that you may have had to suffer as a result of the refusal. If your insurance company has been dishonest you may also get punitive damages. This is a means to make the insurance company behave more responsibly in future correspondences.

It is good to keep all paper works organized so that you can find them as soon as you need them. You may think of an old receipt as unimportant but it might hold great importance when you have a case standing against your insurer for bad faith or breach of contract.

Related Readings

I'm confused, please help. Here's my story and question. I'll try to make it short. My car was hit about a month ago. I was not in the car. It was parked on the side street. The driver of the truck that hit me left a note with all of his information. Now, it has been almost a month, and his insurance is not doing much. At first, they promised to have the damage estimated, but then nothing was sent to the car shop where my car located. I ended up going through my own insurance company. The problem is before I went with my insurance company, I had rented a car and had discussed this with the other insurance company. They said they would reimburse me all the fees. Now, they're not answering my calls. They keep on telling me that the agent is busy and will get back to me. It has been 4 days since I faxed in my car rental bill. What can I do? Can I sue them? Would you tell me how to sue an insurance company? The bill was paid for by my credit card, and I don't want to owe interests on it. Please help. Thanks.

Total Comments: 380

Posted: Wed Jul 24, 2013 10:43 pm Post Subject:

Just another reason there should be an IQ test for plaintiffs before filing small claims court cases.

Posted: Fri Aug 02, 2013 11:50 am Post Subject: Comprehensive and Collision

I told Geico I had a lien holder when I requested Comprehensive and Collision coverages. I paid $328.19 in February, 2013 and subsequently paid approximately $200.00 every month thereafter. Geico said my policy amount was $1,977.00. However, when I filed a claim on 7/24/2013, Geico said I did not have collision coverage, and I have just found out my lien holder is not on the policy. Is there anything I can do?

Posted: Fri Aug 02, 2013 01:42 pm Post Subject:

Is there anything I can do?


Read your policy when it's sent to you. That way you would see that there was no comp/coll coverage and no lien holder.

You can feel free to file suit against the at fault parties.

Posted: Fri Aug 02, 2013 06:25 pm Post Subject:

As tcope has said, your first mistake was not reading your policy and knowing what your coverage included. This is a common "problem" when people who don't understand insurance attempt the "Do-It-Yourself" method. Would you attempt to perform open heart surgery on yourself?

It doesn't much matter that your lienholder is not listed as an additional insured. It was up to your lender to verify that you had collision coverage or obtain forced-placed coverage to protect its security interest if that is a condition of your loan. It is possible that you have coverage through the lender and don't know it -- they just tack on the added cost of the insurance to your loan and you pay exorbitant interest on that, too.. They are supposed to notify you that this has happened, but you probably didn't read that notice either -- if it was sent to you.

Personally, I have my auto coverage with GEICO, and I find it odd that you have no idea that you were not covered for collision. The application process through the GEICO website very clearly identifies all of the coverages available and you are responsible for checking the appropriate boxes in that application for the coverages you want. Collision coverage also requires the selection of a deductible amount, so that is one additional step you must affirmatively take when obtaining your coverage.

When your coverage is issued, you receive a contract with a Declarations Page that describes all of your coverages, and would show the name and address of your lienholder if you actually included that information in your application. You can also view that Declarations Page on the GEICO website any time you want and can print out a copy of it as well.

That the actual coverage you had was unknown to you -- that's a complete failure on your part.

You don't indicate whether the claim is due to a collision that was your fault or someone else's. If someone else's fault, then your damages are their responsibility. If your fault, then the damages are your responsibility. You apparently have liability coverage to pay damages you do to others ($1900+ worth of premiums for liability only?? You are either very young and have a poor driving record, or are older and have a terrible driving record).

If the damages are your responsibility, and your lienholder failed to obtain forced-placed insurance because you failed to provide coverage for collision, it is possible that your lender could have breached its contract with you, making it liable for your damages. You might want to consult with an attorney to see where you stand.

Posted: Fri Sep 27, 2013 06:03 pm Post Subject: Insurance refusal to pay my claim on fully covered car

I'll try to tell my story in a nutshell if possible. I have had the same insurance company for 13 years. Back in 2008 My mazda3 year 2005 was carjacked and totaled via a police chase. I was paid for this claim and it was settled by my insurance company in 2008. I then used the money towards a down payment on a brand new Mazda3 fully loaded 2008 which I paid a total of $28,000 for and financed the vehicle. Unfortunately I was in an accident 9/9/13 in which my Insurance company deemed my mazda3 2008 totaled. Keep in mind I only had around $2,000 left to pay the bank and the car title would have then been mine. Unfortunately my insurance company has somehow been insuring me under my prior 2005 Mazda which they had totaled back in 2008 as I previously mentioned, and have full paper work on the payout and claims handler.

I had no idea to be honest being that the car was the same make and model but just a different year. Now I'm being told that they refuse to pay me for my car whether it be the 2005 (which they already paid me for years ago) or my 2008 Mazda 3 which I paid $28,000 dollars for. (Funny part is that it happens to be the same lady handling my claim now, who handled the one in 2008). My question is that they are claiming it is my fault the new Mazda wasn't switched over and put under the policy. However I have paperwork with the VIN # of the 2008 and the insurance company listed on the paperwork from the dealership which shows the policy and the 2008 car of which I've already faxed over to the insurance company.

Now they have stopped payment on my rental car and refuse to pay me anything for this totaled car regardless of which year it is listed as. Is this even legal? They did agree to reimburse me the last 6 years of my insurance money which would be reasonable since the last 2 years I've paid $4,000 per year and about $1500 the 4 years prior to that. However if I take this offer where does this leave me with my medical bills being that I have two broken ribs from this accident? Also there was supposedly another car involved in the accident according to the police report. Unfortunately I can't remember anything an hour prior to leaving my friend after watching the Dallas giants game on Sunday night 9/9/13 till I had an airbag hit my face and wound up in an ambulance.

I had not been drinking and have the police report which indicates just that. However after following up with my primary care physician too check my broken ribs out, I found out even more disturbing news from him which based upon my memory loss and accounts of that night, is positive I was slipped something in my water. Not only does this scare the heck out of me, but I also don't know if it can be proven (though he has sent requests out to the hospital where I was treated in hopes that they did some tests which will be released to him). I feel so lost helpless and betrayed by an insurance company I trusted for 13 years. I don't know what to do and don't know if I have any legal rights to take action against my insurance company?
I don't know much about what my options are. If I take my refunded insurance money, does this mean they won't pay for any damage inflicted upon the other driver, and it would then be my responsibility to pay for his car? Since I can't remember hours prior to the accident and full memory loss of what happened during the accident, how can I know this other party claiming me to be at fault is even the truth? If the hospital finds proof of me being slipped a drug, am I still at fault?
Lastly does my insurance company have the right to pay me nothing for my car even though I had no idea of this mix up with my policy? I could really use some advice because I feel I'm being taken advantage of by an insurance company who knows I don't know enough about this type of process to fight them on it. Please help if there is anything you may know about this kind of situation and if what they are doing is even legal, or are they taking advantage of a situation they know I know little info about? I'd appreciate any advice you could give me because I'm a wreck right now and feel completely helpless and taken advantage of by those I trusted. (Also i should probably add that i dont have the funds to hire costly lawyers especially since im out of work with a rib injury and am a part time student) Thank you.
Sincerely,
M.L.M

Posted: Fri Sep 27, 2013 06:49 pm Post Subject:

my insurance company has somehow been insuring me under my prior 2005 Mazda

and

They did agree to reimburse me the last 6 years of my insurance money which would be reasonable since the last 2 years I've paid $4,000 per year and about $1500 the 4 years prior to that.

and

Lastly does my insurance company have the right to pay me nothing for my car even though I had no idea of this mix up with my policy?


Well, you've answered part of your question. I have no idea how you would not know there was a mistake in your coverage documents . . . unless for the past six years you never looked at them, as a responsible person is supposed to do. You are required to notify the insurance company of any errors in your coverage documents, otherwise the assumption is that they are correct. This is, however, a very strange set of circumstances.

If they give you back all your premiums, then you have not been harmed by the insurance company. If they do not have your money, you have no insurance, and no claim is payable.

On the other hand, it they are doing this simply as a way to avoid a claim they actually are obligated to pay, you may have some legal recourse. You should file a complaint with your State's Dept of Insurance to see if this cannot be sorted out.

As for your medical bills and amnesia and possible drugging, those are not the responsibility of your auto insurance, although you might have had PIP or MedPay coverage that could apply.


i dont have the funds to hire costly lawyers

If this is a case of insurance company bad faith, you won't have to pay an attorney to take your case on "contingency". The attorney will take a percentage (30%-40% or more) of your settlement.

Posted: Fri Sep 27, 2013 07:22 pm Post Subject: Insurance

I am going to file with my state's dept of insurance in NJ. In fact my father has already spoken with them and they think I have a very good case because my insurance is willing to pay out the other party involved in the accident but give me nothing (a paying customer of 13 years). fortunately u cannot leave the lot of a dealership without proof of insurance and my company damn well knows that. I have Mazda looking into archives b/c they are obligated to fax the insurance company with the new car info. I gave them extra incentive to do this quickly since i plan on purchasing another mazda from them. I think my company is just pissed because they are "whores" excuse my language and are taking advantage of the fact that I am young and know less about the law pertaining to car insurance. I have full medical coverage up to 250,000 however if I were to be refunded without having to pay for any damage to the other party I would only receive money for my collision which is worthless, maybe 3 grand at the most over 6 years. I just find it impossible that they can pay me nothing at all on a car they were insuring same make and model but a different year. The fact is my dealer is required to contact my insurance company whether it be via fax etc... I just hope archives will find these documents. If not as I said my state of NJ thinks I have a very good case to file a complaint against the insurance company...lets see what their response is after getting that inquiry from the dept of insurance, which I will make sure they have every piece of paperwork from the prior totaled car in addition to every bit of info and paperwork I have on this recently totaled Mazda. Thank u for the speedy response. My parents are very pissed so they are most likely going to assist me with this matter, but if u have any other advice you think I could use I'm open to any and all you have. Thanks again :)

Posted: Fri Sep 27, 2013 11:40 pm Post Subject:

The fact is my dealer is required to contact my insurance company whether it be via fax etc

I don't know that they have an obligation. However, _you_ do. Actually the dealer _can't_ add a vehicle into your policy. Only you can do this.

Posted: Sat Sep 28, 2013 03:22 am Post Subject:

because my insurance is willing to pay out the other party involved in the accident but give me nothing (a paying customer of 13 years).

These two statements make little or no sense. If the insurance company refunds six years' premiums, they're saying you have had no insurance in that time . . . and they would not pay the claims of any other person. If you were at fault for the collision, the injured party would be coming after you.

Second, whether you've been an insured with the same company for 13 years or 13 months, policyholder longevity in property & casualty insurance is generally meaningless. You are purchasing auto insurance one year at a time on an "occurrence" basis. A claim must arise during the policy period, otherwise there is no claim payable.

Other forms of P&C insurance may cover claims on a "retroactive" basis if coverage was in force during that time period. But even then, the coverage that was in effect could have been from another insurer -- there is only a requirement for continuous coverage.

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