Can You Sue An Insurance Company Over A Property Damage Claim?
You buy property insurance to protect your property. Unfortunately, insurance companies don’t always protect policyholders and hold up their end of the deal. Has an insurance company denied your property damage claim? Is your insurer dragging its feet and taking too long? Have you been offered a much lower insurance settlement than you expected?
In all of these situations, policyholders might consider how to sue an insurance company over a property damage claim, or if you can sue an insurance adjuster assigned to your claim.
In this article we’re explaining what you should know about how to sue an insurance company and the claim situations that may warrant bringing a lawsuit against an insurer.
At this point in the process you may be wondering when, or if, you should sue your insurance company.
Be Advised: Each insurance claim situation is unique and there is no perfect one-fits-all solution, especially when it comes to claim disputes and denials. The following tips and guidance are meant to serve as general information, should not be taken as personal recommendations, and are in no way legal advice.
For more in depth information and guidance on your specific situation, talk to an expert Public Insurance Adjuster.
Yes, You Can Sue Your Insurance Company Over A Property Claim
Yes, you can sue your insurance company for a number of reasons related to a property damage insurance claim. In some situations you may feel you have no other choice and decide you should sue your insurance company – if they have acted in bad faith, wrongfully denied your claim, are delaying, giving you the runaround, or taking too long, for example.
If your insurer has taken advantage of you, is taking entirely too long to process your claim, has confused you with unclear insurance terms, or engaged in other dishonest activity, then you may have a strong case for a lawsuit.
Insurance is essentially a contract. Specifically it is a contract of adhesion. When you sign an insurance policy, you’re signing a legally-binding contract with your insurance company.
If a certain loss occurs, then the insurance company is required to cover that loss according to the rules outlined in the insurance contract, in order to repair or replace the covered property to it’s pre-damage condition.
The insurance company is legally required to abide by the terms of that contract. If the insurance company doesn’t fulfill that obligation, then the insurer could face legal consequences in a lawsuit.
When to Sue your Insurance Company
There are all types of situations where you can consider suing your insurance company.
Generally, if your insurer has violated the terms of your insurance contract, then you may want 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 are required to abide by certain legal requirements. Specific requirements vary between states.
However, all states require insurance companies 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.
You also have the option to file a complaint against your insurance company with your state’s department of insurance. In some situations this can resolve issues without the need for a lawsuit. If you do decide to sue your insurance company, having a record of filing a complaint about the issue can also help your case.
Some of the most common reasons to sue an insurance company include:
- Failure to Pay On Time: If the insurance company is taking too long and does not make a reasonable effort to pay out your legitimate claim, then the insured may be able to make a bad faith claim.
- 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 file a bad faith claim.
- Failure to Represent: Some insurance companies refuse to defend their clients in court. That’s a problem, because most insurance policies 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 company. The insurer has breached the legal contract.
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 an 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 have felt 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:
- Request a full copy of your insurance policy from your insurance company (if you do not already have a copy in your possession).
- 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.
- 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.
- 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.
- 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 with the involvement of a qualified Public Adjuster – without the need for an insurance attorney.
However, in many cases even if you decide to sue your insurance company a Public Insurance Adjuster can be your best first-line to help document and prepare your case for a lawsuit. 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 work things out with an insurance company in a matter of months and eliminate the need for a drawn out legal battle. However if a lawsuit becomes the best option, that public adjuster will work to prepare and document everything for your claim and work closely with your attorney, giving your case the best possible chance for success.
That’s why many insurance policyholders hire a public adjuster before proceeding with a lawsuit. 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.
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.
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.
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 timeframes 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’s can be a sign that something is wrong.
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.
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.
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, 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 professional 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.
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.
