Can You Sue Your Insurance Company for Denying a Claim?

Personal Injury - May 20, 2020

When you make a legitimate claim with an insurance carrier, and the carrier violates or fails to follow the terms of the insurance policy, you may be able to file a lawsuit to recover compensation. There are various ways that insurance companies commit “bad faith” insurance practices. The good news is that there are laws designed to protect consumers from illegal actions on the part of insurance carriers.

Dealing with issues of injuries, property damage, or the death of a loved one is hard enough. Nobody should have to deal with battling their insurance company for their rightful benefits. Here, we want to discuss why an insurance claim may be denied and what you can do in the aftermath.

Reasons insurance companies can deny your claim

The truth is that insurance companies have many reasons they can give for denying the claim. Some reasons may be legitimate, while others most certainly are not. Some of the most common reasons an insurance company may give for denying a claim include:

• Lack of coverage. The insurance carrier may argue your claim is not covered under the policy. It is vital that you completely read all policy exclusions to understand what is not covered. Any ambiguities in the language may result in a decision in your favor from a judge.
• Claim errors. This will revolve around the policyholder’s requirement to make a claim within a required amount of time. Some insurance carriers have tight reporting time frames.
• Application errors. An insurance carrier may say that you made misrepresentations on the initial application for coverage that could nullify a payout under the policy.
• Insurance fraud. This denial could be made if the insurance carrier says you submitted false or exaggerated claims.
• Bad faith denial. While the insurance carrier will never say this is the reason there are giving a denial, there are times when the carrier operates in bad faith when denying the claim. The carrier will often mask a bad faith denial in confusing insurance language to disguise the fact that they just simply do not want to pay for the claim.

What is insurance bad faith?

When an insurance company operates in bad faith, they could be held liable. All insurance carriers have obligations to their policyholders. Every state has guidelines in place they regulate the insurance industry, and these guidelines typically require insurance companies to refrain from all of the following types of behavior:

• Failing to adequately investigate a claim or delaying an investigation.
• Refusing to pay a claim when the liability is reasonably clear.
• Denying a claim with little or no explanation of the reason for denial.
• Failing to deny or approve a claim within a reasonable or specified amount of time.
• Failing to defend you (their policyholder) in a liability lawsuit when at least one of the claims is potentially covered by your policy.
• Denying a claim based on an application misstatement after the “period of contestability” has passed.

If an insurance carrier does any of those things, you may be able to hold them liable for bad faith insurance practices. If you believe that you have been the victim of bad faith insurance practices, you need to speak to an attorney for a free consultation of your case. Not only will an attorney be familiar with the legal obligations of the insurance carrier, but they will be able to provide you with a clear perspective on your potential lawsuit. Sometimes, simply involving an attorney is enough to get the insurance carrier to change their mind.

What kind of compensation is available in these cases?

There are various types of compensation available to victims who have been wronged by their insurance carrier. An insurance attorney will be able to explain the different kinds of damages to you in-depth, and the following are generally available:

• Payment of compensation for the original claim in question (medical bills, property damage, out-of-pocket costs, pain and suffering, etc.)
• Damages in excess of policy limits
• Statutory penalties
• Interest on the damages
• Emotional distress
• Attorneys’ fees
• Possible punitive damages

How can you prepare for a lawsuit against your insurance carrier?

If you think you may end up having to file a lawsuit against your insurance carrier, there are some steps you can take to ensure you are best prepared. This can include:

• Documenting any correspondence you have with the insurance carrier and their representatives. Keep copies of everything, do not delete any emails, and take notes of every phone conversation. Always remember that they are likely recording your calls, so stay calm and never give away too much information on the phone.
• Maintain records related to the claim (regardless of what type of insurance claim you are making). This includes photos or video surveillance, eyewitness names and contact information, accident reports, and more.
• Keep track of every expense you incur throughout this entire process, including any additional expenses you incur after an insurance denial.
• Choose an attorney that has extensive experience handling bad faith insurance claims. Not every attorney specializes in this type of case, and insurance laws can be complex.

Do you need an attorney to help with this case?

If you have made a legitimate claim with an insurance carrier and the carrier is denying your claim, or you believe they have otherwise committed misconduct, it is time to seek legal assistance. At Horwitz, Horwitz & Associates, our knowledgeable and experienced claim denial insurance attorneys are ready to defend your interests. You have already had to deal with the events that led to you making an insurance claim – you should not have had to deal with an uncooperative insurance carrier. You can be sure that the insurance carrier will have a team of attorneys to defend themselves against any claim you make, so you need one of your own to level the playing field. Please call our Chicago office at (312) 372-8822, or our Joliet office at (815) 723-8822, or you can call our toll free number at (800)-985-1819.