Can I Sue an Insurance Company for Denying My Claim?

Can I Sue an Insurance Company for Denying My Claim?

People may file lawsuits against their insurance carriers when the companies refuse to provide the agreed-upon coverage for valid claims. Due to injuries suffered in auto accidents, people often incur expenses, including lost wages, medical bills, and pain and suffering. Through claims filed with their insurance companies or the insurance carriers of the at-fault motorists, many seek to recover compensation for their losses. Despite their catchy slogans and commercial claims, insurance companies typically seek to limit what they pay out to clients, and instead, protect their own bottom lines. Therefore, while it goes against their contractual obligations to their clients, some insurers may offer less than fair amounts or refuse to pay altogether.

What Types of Legal Action Can I Take Against my Insurance Company?

When disputes arise between them and their insurance companies, people have several paths toward achieving resolutions. They may negotiate on their own or with the assistance of an auto accident attorney. Alternatively, they may choose to file a formal complaint with the Nevada Division of Insurance. If they file a complaint, the DOI will act as a liaison, helping negotiate a settlement between the customer and his or her insurance company.

If they cannot reach agreements through the above or other such means, people may consider filing lawsuits against their insurance companies. Depending on the circumstances of their denials, they may sue based on insurance bad faith or breaches of contract.

Damages for Insurance Lawsuits

If successful in lawsuits against their insurance companies, people may receive various damages. Beyond what the insurers owe them for their covered claims, the court may order insurance companies to also pay policyholders damages for amounts they paid out-of-pocket to defend their claims and the fees for legal representation hired to help them obtain their benefits. In some cases, the court may also order additional damages for emotional distress and mental suffering caused by the bad faith actions.

Reasons an Insurance Company may Deny Your Claim

Insurance companies provide wide-ranging reasons for denying claims that they should cover. Some of the most common reasoning for auto insurance denials include the following:

  • Claim errors – mistakes in providing the insurance company notice of an accident
  • Application errors – mistakes made in the original application that nullify policy coverage
  • Lack of coverage – claims for incidents or coverage not included in the policy
  • Insurance fraud – exaggerated or false claims

In addition to these reasons, insurance companies sometimes issue bad faith denials. In such situations, they often offer several justifications for why they will not pay a valid claim.

What is Insurance Bad Faith?

Insurance bad faith refers to attempts on the part of insurers to go back on their obligations to their clients. Such attempts include refusing to adequately and in a reasonable period investigate insurance claims, as well as declining to pay legitimate claims. When considering what is insurance bad faith, people should keep in mind that simple differences of opinion do not qualify, nor do mistakes. Rather, bad faith denials include cases in which adjusters cannot or will not give a reasonable explanation of their decisions.

When Can I Sue the Insurance Company for Denying my Claim?

If people cannot resolve auto insurance disputes through alternative, out-of-court options, they may file civil lawsuits against their carriers. Before moving to this option, however, those seeking coverage payouts should attempt to achieve solutions through internal or external reviews of their claims. To this end, they may appeal the original decision through their carriers’ stated procedures. Alternatively, they may make a formal complaint with the DOI to seek the agency’s assistance. People must file lawsuits for insurance bad faith claims within four years of when the insurer made the adverse action.

How to Sue the Insurance Company for a Denied Claim

To initiate a lawsuit against their insurance company for wrongfully denied claims, the insured or a bad faith insurance attorney on their behalf will file a complaint with the appropriate local court. The court will hold a hearing, during which both sides argue their cases and present evidence before the judge who ultimately issues a ruling.

In making a determination, the court will consider factors such as whether the contract requires the insurer to pay, that the policy covers the type of claim filed, and that the insurance company did not act in good faith in its handling of the claim. Often, legal representatives in such cases will establish patterns of mishandling clients’ cases by the insurance company – making it easier to prove bad faith.

Proving Insurance Bad Faith

To recover compensation based on insurance bad faith, people will have to prove the insurer denied them benefits that it knew or reasonably should have known had no legitimate basis. When entering coverage contracts with clients, Nevada law requires insurance companies to act honestly and in observance of the reasonable standards of fair dealing. Therefore, clients who prove their carriers failed to pay legitimate claims when they experienced covered risks, promptly and fairly investigate claims, or use good faith efforts to reach settlements may have the right to recover monetary damages. Clients in such cases largely rely on documentation and correspondence between them and their insurance carriers to prove their cases.

Documentation for Insurance Dispute Lawsuits

The insured or their attorneys should gather evidence that supports their claims of bad faith or breach of contract. The documentation people may collect to use as proof in such claims includes the following:

  • Copies of insurance policy and related documents
  • Copies of emails with claims adjusters or other insurance company representatives
  • Records of related expenses, such as medical bills, attorney fees, and lost wages
  • Copies of medical records associated with involved injuries
  • Photos of the accident scene and resulting injuries and damages

It may also help people to take notes when communicating with the insurance companies over the phone. They should note the dates and times of calls, as well as the names of the representatives they speak to, what they discuss, and other information that may seem relevant. Insurance companies often record phone calls with clients, so people should take care to remain calm during their conversations. They should also refrain from saying anything that the insurer could potentially construe as them admitting fault or giving up their right to compensation.

Auto accident injuries may leave people struggling with physical, emotional, and financial challenges. Successful legal action against their insurance companies may help them to obtain the compensation they need and deserve to support them through their recoveries.