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Suing Your Car Insurance Company

What If I Have to Sue My Car Insurance Company?

What do policyholders do when their car insurance companies fail to handle their claims effectively? A lawsuit is one possibility, but it should be a last resort.

Dealing with a claim is rarely easy. It will take time and patience to resolve complex issues. If you find that you are not given what seems to be fair compensation, or your claim is denied completely, there are some things to consider before deciding on going to court.

Give It Time

While your claim may seem cut and dry, your insurance claims adjustor is juggling many things at one time trying to settle your claim.

If the adjustor assigned to your case appears to be procrastinating or biased, then ask to speak to a supervisor.

Move your way up the chain of command. While going through all the channels (including appeals) will take time, it can work in your favor if you do end up filing a lawsuit.

Reevaluate the Situation

Before seeing a lawyer, take an objective look at your accident and claim. For example, is there evidence to support the amount of reimbursement that you’re asking for?

Make sure the amount of money you are requesting is reasonable and evidence-based.

Is Your Car Insurance Company Acting in Bad Faith?

Car insurance companies have the responsibility to act in “good faith” when responding to a claim. If the company tries to avoid paying out on a claim, it is acting in “bad faith.”

Examples of bad faith include:

  • Denying your claim without reason or proper investigation.
  • Failing to communicate important information regarding the claim.
  • Putting off payment of the claim for unreasonable periods of time.
  • Paying far less than what is reasonably owed.
  • Failing to negotiate a claim.

If you believe your auto insurance company is acting in bad faith and you’ve been unable to resolve your issue by moving up the chain of command, a lawsuit is an option. However, you should understand the process and the implications of filing a bad faith lawsuit.

Get a Lawyer

If you are seriously considering a lawsuit against your own insurance company, understand that the company will have legal representation, which means you should, too.

A lawyer can examine your claim and offer an objective opinion. If you threaten to sue, be sure to have an attorney prior to doing so.

Do your research before hiring an attorney. Look for someone with experience working with auto insurance companies.

Working with the Insurance Company

Filing a lawsuit will change the relationship you have with your auto insurance agent.

The insurance representative will not talk to you about the matter any further once a lawyer gets involved. If you have other policies with the company, that may become a problem.

Write to the car insurance company asking them to continue working with you on matters outside of the legal action. For example, if you have a home insurance policy with them, you need an open line of communication for it.

What to Expect After You File

Your lawyer will walk you through the process of filing a suit against your auto insurance company. Here are some of the things you can expect.

  • You may be required to give a deposition for the insurance company’s lawyer as part of discovery.
    • Discovery allows both sides to investigate the case.
    • You and your lawyer will get a chance to see at all the documentation from the insurance company.
  • You will incur costs along the way (which may be significant), so plan a budget.
    • Things like travel expenses, filing fees, and court costs may be your responsibility.
  • The lawsuit can take years to resolve.
    • You should not plan on a quick payout. Instead, you will need to find ways to live without the insurance money.
  • Weigh settlement offers carefully.
    • Most lawsuits never see a courtroom; a settlement may be the best chance of a resolution.
    • Your lawyer will advise you on whether the amount offered is fair.

If you feel that your car insurance company has treated you unfairly, a lawsuit is a consideration; however, you should only consider it after you’ve exhausted all other options.

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