Can You Sue an Insurance Company?

Can You Sue an Insurance Company?

You may be able to sue an insurance company if the insurer is not honoring the terms of your insurance policy. Some of the reasons you can sue your insurance company can include the insurer not paying your correctly filed, valid claim on time or at all, failing to authorize a medically necessary treatment or procedure, or refusing to pay you what your personal injury or catastrophic property loss claim is worth. 

Your insurance policy is a legally binding agreement. Your insurance company must abide by the terms of this agreement. They must also avoid unfair trade practices, and they must act in good faith. If your insurer breaches your agreement and acts in bad faith, you have the right to file a lawsuit.

To help make sure that your bad faith insurance lawsuit is successful, you should document all communication between you and your insurers, keep records that detail any covered expenses you have that were caused by the incident and those that arose because the insurer acted in bad faith, and hire an experienced bad faith insurance lawyer to assist you as you file your claim. 

When Can You Sue an Insurance Company?

You can sue your own insurance company if the insurer did not comply with the terms of the insurance policy. The insurance policy is a contract that is created in writing to describe the scope and limits of your coverage plan. There are terms in the insurance policy that set the boundaries and expectations between you as the policyholder and the insurance company as the insurer. Should an insurance company act in ways that violate the terms of their insurance policy, you can sue that insurance company and receive compensation. 

If an insurance policy states that it will provide coverage for certain medical expenses, and the insurance company does not agree to pay for those medical expenses or adequately review your claim, you can sue your medical insurance company. If your insurance company has refused to pay a claim without a good reason, or acted in bad faith and not in compliance with state regulations and the terms of the insurance policy, then you might be able to recover damages from them. 

Common Reasons Insurance Companies Get Sued

There are plenty of reasons why people will sue their insurance companies. Two of the most common reasons why some people in Nevada sue their insurance companies are:

Insurers Acting in Bad Faith

Insurance companies have the obligation to investigate and pay claims covered by their insurance policies. However, some insurance companies unfairly or unreasonably deny paying claims with no legitimate reason, just to protect their own bottom line. Insurance bad faith is about more than a simple difference of opinion between the insured and the insurer. It is deliberate failure by your insurer to act in good faith and fair dealing.

Common examples, of insurance bad faith actions include:

  • Delaying the processing of a claim without a valid reason
  • Failing to adequately investigate an insurance claim
  • Refusing to pay a legitimate claim when liability is reasonably clear
  • Denying a claim without providing a valid reason
  • Failing to defend the policyholder in liability lawsuits involving claims covered by the policy
  • Misrepresenting the terms of your insurance policy to avoid paying a claim

When insurers act in bad faith, they can be held liable for the damages caused by their actions, in addition to getting ordered to pay the original claims in full. An experienced bad faith insurance lawyer can evaluate your case to determine whether you have a cause of action against your insurer. 

Insurers Who Are Not Compliant With the Terms of the Insurance Policy

The insurance policy serves as a legally binding agreement that controls the relationship between the insurer and you as a policyholder. The terms of the policy detail the scope of coverage and the required duties of the insurer. Just as you, the policyholder, are required to pay your insurance premiums, your insurer is required to protect you if a covered event happens, and perform the duties they promised in the policy. If the insurance company acts in a way that violates the terms of your agreement, they can be sued for breach of contract. 

There are numerous reasons why an insurer may deny a claim, and not all denials warrant a lawsuit. If you failed to pay your premiums, for instance, a denial of your claim may be legitimate. 

How Do You Sue an Insurance Company?

You can take an insurance company to court if you believe it has violated the insurance policy agreement or has otherwise acted in bad faith. It may be helpful to know the steps you can take to successfully argue your case against the insurance company and receive your compensation. 

The first step in preparing for a bad faith insurance claim would be to collect all relevant evidence and documentation relating to your issue. Evidence could include a copy of the insurance agreement, all conversations between you and your insurance company, reports or photographs, and bills and receipts demonstrating any expenses. 

Although you are not required to hire a bad faith insurance attorney to sue an insurance company, your chances of success increase substantially if you have legal representation. Your attorney will review your case to make sure you have legitimate grounds to take legal action against your insurer. He or she will negotiate with your insurer on your behalf to help you receive a fair settlement. Although approximately 90% of cases like these are resolved through negotiation, and they never go to trial, sometimes trial is unavoidable. If negotiations with the insurance company are not successful, your attorney will go up against your insurer’s lawyers in court, leveling the playing field.