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How to Sue an Insurance Company After an Auto Accident
If you were in a car accident and the insurance company denied your claim, then you may be able to sue the insurance company for a “bad faith denial” of your claim. However, before trying to win in court, you should try to settle the matter with the insurance company out of court. A successful suit against your insurance company will require that you show the insurance company did not satisfy its duty of good faith and fair dealing.
Understand automobile insurance. An insurance policy is a contract between the insured and the insurance company. The insured pays premiums and the insurance company, in exchange, agrees to cover the cost of certain claims. Typically, an insurance policy will cover two types of claims: first-party claims and third-party claims.
- A “first-party claim” is paid directly to the insured.[1] For example, some insurance policies will cover damage to the insured’s car or even an injury suffered by an insured. If you damage your car, you can make a claim for the insurance company to pay to fix it. Your insurer may also cover personal injuries you have suffered. Many driver’s make sure to get coverage for “first-party” claims because they fear that other drivers will not have insurance. In fact, in a “no fault” state, you will have no choice but to bring a claim against your insurer after an accident.[2]
- A “third-party claim” involves injury or harm to a third party.[3] For example, if you get in a car accident and a jury finds that you were at fault, then your insurance company should pay some or all of the damages you owe to the other driver, up to your coverage limit.
Participate in a personal injury lawsuit. When drivers get into an accident, they often sue each other. They do not sue each other’s insurance companies. Instead, the insurance company will “indemnify” its insured, i.e., it will pay some or all of the damages owed, provided that the claim falls within the insurance policy agreement. If the insurance company refuses to pay a valid claim, then its insured may sue it for bad faith.
- If you win at trial but the other driver’s company refuses to pay, you generally cannot sue the insurance company for “bad faith.” This is because the duty of good faith is owed to the insured, not to injured third parties.[4] If you are injured and the other party’s insurer refuses to pay a claim in bad faith, then you can see if the state allows the other party to “assign” its bad faith lawsuit to you.
- Understand an insurer’s duties. An insurance policy carries with it an implied covenant of “good faith and fair dealing” on the part of the insurer.[5] This means that it must discharge all of its duties “reasonably.” An unreasonable delay or refusal to pay a valid claim is an example of bad faith.[6]
- Other duties include a duty to reasonably investigate a claim and a duty to defend against a claim.[7]
Identify “bad faith” conduct. Bad faith can take many forms. To see if you have a claim for bad faith against your insurer, then you need to look for the following:[8]
- Deceptive practices or deliberate misrepresentations to avoid paying claims.
- Deliberate misrepresentation of record or policy language in the hopes of avoiding coverage.
- Unreasonable delay in resolving claims or a failure to investigate.
- Unreasonable litigation conduct.
- Arbitrary or unreasonable demands for proof of loss.
- Coercive or abusive tactics used to settle a claim.
- Compelling an insured to contribute to settlement.
- Failing to investigate the claim thoroughly according to its own procedures.
- Failing to maintain adequate investigative procedures.
- Failing to disclose policy limits and explain applicable policy provisions or exclusions.
- See more at http://www.wikihow.com/
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