Can You Sue An Insurance Company Over A Property Damage Claim?

Yes, you can sue your insurance company over a property damage claim – and thousands of policyholders sue their insurers every year.

However, there may be other ways to resolve the issue without filing a lawsuit against your insurance company – say, by hiring a public adjuster or filing a complaint to your state’s department of insurance.

Keep reading to find out everything you need to know about suing your insurance company over a property damage claim.

Be Advised: Each insurance claim is unique and there is no one-size-fits-all solution, especially with claim disputes and denials. Our tips are meant to serve as general information, should not be taken as personal recommendations, and are in no way legal advice.

Yes, You Can Sue Your Insurance Company Over a Property Claim

Thousands of policyholders in the United States file lawsuits against their insurance companies every year. The issue with going to this resolution early on is that it will likely take over a year to come to any sort of agreement in a mediation, and over three years should your attorney want to take the claim to a jury of your peers.

In some cases, the insurance company has taken advantage of a policyholder in a fraudulent way. In other cases, an insurance company mishandled a claim, denied a claim without justification, or acted in bad faith.

If you feel an insurer has taken advantage of you, violated your insurance contract, or acted in bad faith, then you could consider filing a lawsuit.

Insurers Must Legally Abide by the Terms of Your Insurance Contract

If you sue your insurance company, it may be because the insurer violated the terms of your insurance contract.

When you buy insurance, you’re signing a contract with your insurer. Specifically, insurance is a contract of adhesion, and it’s a legally-binding contract between you and your insurer.

That contract, like all contracts, requires both parties to meet certain requirements:

• When you sign the insurance contract, you agree to pay your insurer premiums, maintain your property, monitor your property, pay a deductible when filing a claim, and meet other standards.
• When your insurer signs the insurance contract, the insurer is agreeing to pay you when a covered loss occurs, compensating you to help restore your property to pre-loss condition.

If your insurer has not abided by its side of the insurance contract, then there could be legal consequences.

If you experience a certain type of loss, for example, and the insurer denies your claim without just cause, then the insurer could be acting in bad faith. The insurer is not abiding by the terms of the insurance contract. It’s violating a legally-binding agreement, which could lead to a lawsuit.

When to Sue Your Insurance Company

There are several situations where it may be in your best interest to sue your insurance company.

Generally, if your insurer has violated the terms of your insurance contract, then it could be in your best interest to sue your insurance company for damages.

Lawsuits arise when an insurance company does not indemnify (fully compensate for a loss) the insured from a covered act under the policy, or when an insurance company otherwise fails to fulfill their end of the contract – like by wrongfully denying an insurance claim or failing to respond to a claim.

Insurance companies must abide by certain legal requirements.

Different states have different legal requirements. However, all states require insurers to respond to claims in a timely manner. Most states have laws governing how quickly an insurer must reply to your communication, for example, and how long they have to pay out a claim.

All states also have a department of insurance, and you can file a complaint to your state’s department of insurance. In many cases, filing a complaint to your state’s department of insurance can resolve an insurance dispute without the need for a lawsuit. Even if it doesn’t resolve the issue, filing a complaint can help your case in a future lawsuit.

Some of the most common reasons to sue your insurance company include:

• Failure to Pay On Time: Have you waited weeks or months to receive payment from your insurer? If the insurance company is taking too long and does not make a reasonable effort to pay out your legitimate claim, then you may be able to reach out to an attorney for penalties and interest for not abiding by your state’s Prompt Payment of Claims Act.
• Unreasonably Low Payouts: The insured may also be able to make a bad faith claim if the insurer offers an unreasonably low amount of money to settle a claim. If your home requires $100,000 worth of damages, for example, and the insurer is offering $15,000, then you may be able to make a case for breach of contract or unfair claims settlement practices.
• Failure to Represent: Some insurance companies refuse to defend their clients in court. That’s a problem, because most insurance contracts require the insurance company to defend the insured in court in certain situations. When an insurer violates this requirement, they have failed to represent the policyholder, and the policyholder may make a bad faith claim against the company.
• Breach of Contract: Most lawsuits against insurance companies fall under breach of contract. An insured may sue an insurance company if the company fails to follow the terms of the insurance contract. The insurer has breached the legal contract and violated a legal agreement, which could lead to a lawsuit.

With property damage insurance claims, lawsuits generally occur because the insurer has offered an unreasonably low payout, failed to pay a claim on time and is taking too long, or breached the contract in other ways.

How to Sue Your Insurance Company

The easiest way to sue an insurance company is to hire a lawyer specializing in the first-party claims process and dealing with insurance companies.

You’re not the first insurance policyholder to feel pushed around by an insurance company. In any major city, you’ll find plenty of lawyers with firsthand experience dealing with insurance claims.

Generally, a lawsuit against an insurance company proceeds like this:

1. Request a full copy of your insurance policy from your insurance company (if you do not already have a copy in your possession).
2. Send a written letter to your insurance company requesting them to send (in writing) a denial of your claim, including the detailed reasons your claim was denied. Your letter should also demand a payout for your claim.
3. Give your insurance company a reasonable length of time to respond to your request. At this point, they may offer a higher settlement or approve your claim to avoid future legal action.
4. File for an administrative hearing regarding your insurance claim denial with your insurer. This is important because your insurance policy may contain a section requiring you to “exhaust all available remedies” before filing a civil lawsuit. If you fail to exhaust all available remedies, then your lawsuit could be dismissed.
5. If all administrative and out-of-court options fail, then you can proceed with a civil lawsuit against your insurance company. You will seek payment for your claim through that civil lawsuit.

Consider Hiring a Public Adjuster Before Suing

Hiring a lawyer can be expensive. In some situations, hiring a lawyer is an unnecessary expense.

Many insurance claim disputes and complications can be resolved by hiring a public adjuster – without hiring an attorney.

In fact, many policyholders hire a public adjuster first, even if they later hire an attorney. The public adjuster is a good first line of defense to document the claim and prepare for a lawsuit. Plus, most public adjusters have experience working closely with insurance attorneys on property damage claim denials, disputes, and other issues where an insurance company fails to uphold their duties to a policyholder.

In an ideal situation involving a potential lawsuit, a public adjuster can help by:

• Working things out with an insurance company while representing your best interests
• Overturning a denied or disputed claim
• Resolving the issue within weeks or months instead of starting a long, drawn-out legal battle
• Preparing documentation if you decide a lawsuit is the best option
• Working closely with your attorney to give your case the best possible chance of success

Because of these advantages, many policyholders hire a public adjuster before proceeding with a lawsuit.

Find a Public Adjuster

A public adjuster is a licensed, experienced insurance industry professional with a proven track record of navigating policyholders through the claims process. Good public adjusters negotiate with the insurance company on your behalf to secure a higher settlement. In many cases, you can solve your insurance problem without resorting to a costly and lengthy lawsuit.

Keep in mind that you don’t need to hire an insurance attorney to file a lawsuit against your insurance company. However, hiring an attorney or public adjuster indicates that your lawsuit will be taken seriously. Both an attorney and public adjuster will help you navigate the complicated world of insurance law. Read more about hiring an attorney vs a public adjuster.

Top 6 Tips for Suing an Insurance Company

Suing an insurance company can be complicated. Here are six tips to maximize your chances of winning your property damage insurance claim lawsuit.

Tip #1: Document Everything About Your Claim

The more documentation you have, the easier a lawsuit against your insurance company will be. Documentation is crucial for any lawsuit. Some of the things to document include:

• Any phone calls with your insurance company, including the name of the caller, the length of the call, and the topics discussed
• Emails, written letters, and other correspondence with your insurance company
• Photos or videos of damage – the more, the better
• Receipts for any expenses
• Invoices from any contractors or other services
• Detailed estimates for damage repairs
• Any other information or evidence that backs up your claim

This is where hiring a public adjuster can really pay off. A good public adjuster documents everything while organizing and preparing a claim in case it ever needs to go to an attorney. They know the information needed to maximize your chance of winning a legal dispute.

Tip #2: If Your Insurance Company is Sending Its Attorney, You Need to Act

If your insurance claim is at a standstill, then your insurance company may assign its attorney to your case. In this situation, it may be wise for you to hire a lawyer or public adjuster to represent your side of the case. Without professional representation at your side, your insurance company has the upper hand.

Tip #3: Excessive Payment Delays Indicate Something is Wrong

Insurance companies shouldn’t intentionally delay claim payouts. There are timeframe mandates to dictate each step of the claims process. These time frames vary from state-to-state. In Texas, for instance, an insurance company has 30 days to make a payment after the replacement cost has been approved and agreed upon. Excessive time delays are considered bad faith. An insurance company’s function is to process your claim as quickly, efficiently, and fairly as possible. If a claim payout is delayed, it could be a sign something is wrong.

Tip #4: Don’t Wait Until a Claim is Denied

If your claim payout has been delayed and your insurance company is dragging its feet, then you may want to hire a lawyer or public adjuster immediately. Once a claim is denied, it can be more difficult to bring that claim back. If there are major issues or signs of bad faith with your insurance claim, talk to a lawyer or public adjuster today while the claim is still being processed.

Tip #5: Avoid Writing Anything in a Letter or Email That You Wouldn’t Want Shown to a Jury

If your insurance claim case goes to court, then your communication with your insurance company may be shown in front of a jury. The jury wants to see communication from the policyholder that is nice, genuine, and specific without sounding like ‘legalese’.

You want the sympathy of your peers. Emphasize the fact that you have always paid your premiums on time, for example, and that the failure to receive this claim payout has hurt your family.

Tip #6: Keep Detailed Timelines

An insurance claim battle may come down to ‘he said, she said’. To avoid this factor, we recommend keeping a detailed timeline of all communication with your insurance company, including any phone calls, emails, and written letters.

Keep notes during every phone call with your insurance company. Or, record every phone call. For legal reasons, you should check your state laws to determine if you need to notify the other party before recording a phone call.

Remember: most insurers record every claims call. Your insurer already has evidence to support their side. You need your own evidence to fight back.

Get a Free Consultation for a Property Damage Insurance Claim Before Filing a Lawsuit

Millions of Americans have sued their insurance companies over property damage claims for taking too long or for acting in bad faith.

If your insurance company is dragging its feet, refusing to pay a claim, or offering a low payout, then it’s likely in your best interest to fight back.

Hire professionals to help resolve your insurance claim issues or help prepare to sue your insurance company. A good public adjuster or insurance attorney can help win your case, ensuring you get the funds needed to recover after a loss.

Contact ClaimsMate today to speak with a qualified public adjuster. Our public adjusters are skilled, licensed insurance professionals with proven expertise tackling tough insurance problems.

Contact us today for a free consultation. The sooner you talk to us, the sooner your property insurance claim issues can be resolved – with or without a lawsuit.

Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.