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Can I Sue My Car Insurance Company When It Denies a Claim?
If you have adequate, relevant coverage for the incident and you file your claim information correctly, you may have the option to pursue legal action against your car insurance company in the case that it denies your claim. However, certain circ*mstances must be met to sue your insurer. While it’s relatively common for policyholders to sue their insurance company, you may want to speak with a lawyer to determine whether this course of action is worth it.
Reasons To Sue Your Car Insurance Company
After an accident or other covered event, you expect your auto insurance company to cover your claim. However, this isn’t always the case. If your insurer exhibits the following behaviors, it may be worth considering legal action:
- The company takes an unreasonable amount of time to pay your claim (some state laws provide specific time frames for resolving claims)
- The payout offer is less than the agreed-upon amount
- The company denies your claim outright even though you submitted your paperwork properly and had adequate coverage in place before the claim
- The carrier draws out its investigation of your claim
- Your carrier doesn’t provide a reason for its claim denial
Why Do Insurance Companies Deny Claims?
Insurance companies can deny claims for many reasons. Some of the most common are:
- Inaccurate information: Providers can deny claims that include errors or incorrect information.
- Lack of coverage: Insurers won’t cover certain expenses and repairs if you don’t have the correct coverage for the situation. Read your policy thoroughly to ensure you have relevant coverage for the claim you need to file.
- Fraud: If your provider detects any signs that you’re trying to commit fraud, such as a claims adjuster finding evidence you purposely damaged your vehicle, it will deny your claim immediately.
- Bad faith denial: Sometimes, you can do everything right and still your insurance provider might deny your claim. If your insurer doesn’t provide a valid reason for its denial, or if you filed all the information accurately and your policy indicates that it should cover your claim, you can look at claims mediation or gather legal advice for next steps.
How To Sue Your Car Insurance Company
If you decide to move forward with suing your insurance company after a denied claim, start by following these steps.
1. Prepare Documentation
To get the process started, collect all relevant documents and communications with your insurance company. This includes the denial letter, a copy of your car insurance policy, any repair or medical bills and all other documentation you have.
2. File an Appeal With Your Insurer
Before pursuing legal action, it’s worth filing an appeal with your car insurance company first. You’ll submit a letter of appeal to your insurer explaining why your claim should be covered, along with the evidence and documentation you’ve gathered.
3. Reach Out to an Attorney
If you’ve explored all your options and have decided to sue your car insurance company, you’ll want to reach out to a lawyer who specializes in car insurance law. A lawyer can provide insight into whether you have a valid case, how much compensation you may be able to receive and whether it’s worth the time and investment of pursuing legal action.
Lawsuits can be drawn-out processes that may require a great deal of time, effort and money, so make sure you do thorough research to ensure it’s worth it before committing to taking legal action against your insurer. If you have a solid case and find a reliable attorney, it may help provide the financial compensation and peace of mind you’re seeking.
Alternatives To Suing Your Car Insurance Company
Because lawsuits can take a long time to work their way through the court process, you might consider some alternative actions to a lawsuit, such as the following:
Review Your Claim and Current Policy
Make sure all the information you submit is correct and that your insurance policy covers the reason for the damage. In some cases, you may not have adequate coverage or may have made a mistake when filing the claim, which can result in a denied claim.
So before pursuing legal action, take the time to go over the types of coverage you have and the protection they offer. Here’s a quick look at the different types of standard car insurance:
| Liability insurance | This is the minimum amount of auto insurance coverage required in 48 states. It covers other drivers’ property damages and medical expenses when an accident happens. If you have liability insurance only, you cannot sue your insurance company for not paying for repairs to your vehicle. |
| Collision insurance | Collision coverage pays for damage to your vehicle that results from an accident or collision with an object. It comes with a deductible that the policyholder must pay the auto body shop or mechanic before the insurance company pays for repairs. |
| Comprehensive insurance | Comprehensive coverage pays for damages to your vehicle from non-moving events such as fire, hail, tornadoes, floods and falling objects. It also pays for repairs for when you hit larger animals. |
| Uninsured motorist coverage | If you’re involved in an accident with an uninsured driver, you won’t have their insurance company to pay for repairs or medical bills you incur. With this coverage, your insurance company pays so that you’re not on the hook for out-of-pocket expenses. |
| Personal injury protection | Known as PIP, this coverage pays medical expenses for drivers in no-fault states. It covers trips to the doctor, surgeries, lost income and death benefits. |
| Medical payments coverage | Also known as MedPay, this covers medical expenses regardless of who the at-fault driver is. You’ll receive coverage for medical bills such as hospital visits, nursing services, X-rays, ambulance expenses and funeral costs. |
File an Appeal
If your insurance provider denies your claim, you can appeal the decision. To make your case more compelling, send in documentation that supports your case, such as witness statements, police reports, videos and photos of the accident scene and damage to your vehicle.
Opt for Claims Mediation
Claims mediation is a process for a third party to hear both sides of the claim and determine the outcome based on the evidence presented. In most cases, if you receive a payout, it’s not usually as high as what you might receive in court. However, claims mediation can be a faster process that results in a more timely payout if you win a settlement.
Suing Your Car Insurance Company: The Bottom Line
When you purchase a car insurance policy, you expect your provider to cover the agreed-upon amount of your car repair and medical bills when an accident happens. However, if the company denies your claim and you have relevant coverages and filed all your claim paperwork correctly, you have options to consider. You should first file an appeal, providing documentation to support your claim.
Some insurance carriers issue multiple denials or drag their feet reviewing claims. If so, you can go to claim mediation or gain a free consultation with a personal injury attorney. If the attorney decides you have grounds for a lawsuit, the firm will work on your behalf to gain the money owed to you. However, this is a lengthy process that can take years to resolve.
Car Insurance Recommendations
When shopping for reputable car insurance companies, here are two of the best to consider:
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State Farm: Best Customer Experience
State Farm offers some of the most affordable insurance premiums. It has discounts for bundling multiple policies, safe driving and for full-time students earning good grades. State Farm also has coverages to meet needs from full-coverage insurance to ridesharing. The insurer has offices nationwide. So, if you ever need help with a claim you filed, you have an insurance agent you can go to for help.
Read more: State Farm Insurance Review
Erie Insurance: Best for Basic Insurance Coverage
Erie Insurance rates among the top providers for customer satisfaction relating to claims, according to J.D. Power. Erie has ample insurance to cover pet bills, locksmith services, personal item coverage and auto glass repair. You can save money through the provider’s bevy of discounts for safe driving, multi-policy and reduced usage, where if you don’t drive for at least 90 consecutive days, you’ll save on your insurance premiums.
Read more: Erie Insurance Review
Suing Your Car Insurance Company: FAQ
Below are frequently asked questions about whether or not you can sue your own car insurance company.
Bad faith insurance is when a provider refuses to investigate or pay an accident claim, even though you have the correct coverage and you filed all claims paperwork correctly.
You can fight a rejected insurance claim by filing an appeal. In your appeal, provide documentation, pictures and witness testimony to support your claim. You can also go to claims mediation, where a third party hears both sides and makes a determination. Lastly, you can hire a personal injury attorney to recover your financial damages.
An insurance company is a firm that issues policies that financially protect a policyholder who pays up-front premiums for specific financial coverage. Insurance carriers set underwriting standards to assess risk and calculate premiums to offset some of the financial risk.
Our Methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
- Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
- Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
- Customer experience: This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
Our credentials:
- 800 hours researched
- 45 companies reviewed
- 8,500+ consumers surveyed
*Data accurate at time of publication.
