Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • You can sue your own insurance company but you must have a valid reason to do so
  • Failure to pay claims is the main reason people sue their insurance company
  • Shop and compare to make sure your company will pay

Are you unhappy with your insurance company? Did you have a bad experience with your auto insurance company or are considering legal action against them?

The question of whether someone can sue their own insurance company often comes up in financial and legal circles. The first answer is simple: Yes. The truth is, actually, that you can sue anyone. This does not mean, though, that you will win. First, you must determine if you have a case.

If you need to change car insurance companies, enter your zip above and compare rates in your state!

Determining the Validity of Your Case

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The biggest problem with a lawsuit initially is determining whether you have a case or not. This is not always easy and may require that you meet with attorneys to determine whether your case is valid or not. Below are some of the cases that lead some people to sue their insurance company.

–Failure to Pay Claims

The most common reason the people sue their insurance company is the failure to pay a claim. People pay premiums every month with the assurance that their claims will be paid if they have an accident. This is the reason people have insurance to begin with. So when an insurance provider fails to pay up, it is very disconcerting and unfair. This is the most valid reason as to why you may be able to win a legal content with your own insurance company.

Failure to Pay in a Timely Matter

Second to failing to pay a claim is the failure to pay in a timely manner. When insurers say they will pay the claim but fail to send payment in time to fix someone’s car, they endanger the security of the driver who was not at fault and who may rely on their transportation for work and other important responsibilities. This is another reason for a lawsuit if the company refuses to cooperate.

– Releasing Funds so Late that it Costs Huge Expense to Driver

Expenses can mount up such as car rental fees and loss of work due to not having their car. When this happens, a person may have to sue their insurance company in order to be compensated for time off work, rentals, and other expenses. In addition, they may also experience mounting medical expenses that are not covered if the insurer drags their feet on claim payment.

– Raising Premiums to Unrealistic Rates when Undeserved

Another reason someone may feel compelled to sue their insurance company is when they raise their premiums too high when it’s not deserved. If you are ruled at fault in an auto accident, it is natural to expect an increase in premiums. But when insurers raise your rates too high when you didn’t deserve it, this may also be grounds for a lawsuit.

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Consider Your Case

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Do you think that you qualify for any of these situations? Have you been put off by your insurance company when asking them to pay a claim? If so, you may have a case to sue. It is not recommended to sue unless you have exhausted all efforts to get them to pay.

Remember that your insurance company is there as a legal and financial protection. The last thing you should do is have to go against them in court or with a legal action.

Why is this such a big decision?

Insurance companies have more money and power than you do and it is difficult to take on a wealthy insurance company and win. It is not impossible, however, if it is clear that the insurance company agreed to pay your claim and did not.

Before deciding to take action, make sure that you were current on your premium at the time of the accident because they may use that as a reason not to pay your claim. If it is true that your policy had lapsed at the time of your accident, they would have a valid and lawful reason to reject your claim.

Steps in Filing a Lawsuit Against Your Insurance Company

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If you do decide that you have a case against your insurance company, here are the general steps that you would take to pursue legal action.

  • Determine case validity with an attorney.
  • Gather your documentation.
  • Print out copies of premium payments and dates.
  • Get a copy of the police report.
  • Get a statement from insurance adjuster if any.

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Should you sue?

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In the past, there have been large numbers of lawsuits between drivers who felt they had to fight it out in court in order to get what they deserved. That is the role of the insurance companies: to offer financial security to drivers so that they would not feel compelled to take the law into their own hands.

So it is a hard decision to decide to sue your own insurance company, who is supposed to be the one on your side to protect your financial loss and risk.

However, like any company, insurance companies sometimes make mistakes or refuse to pay. If you have reviewed our litmus test earlier in this articles regarding what you should consider to see if you may have a case before going forward with it.

But if you see that you are suffering a financial disadvantage due to your company refusing to pay, you have every reason to take legal action to get what you are legally entitled to.

A good test to ask yourself is whether you can afford not to sue when you are struggling and losing money due to out-of-pocket expense or legal and financial hardship that you are under due to their failure to pay.

The Best Solution

If you find yourself in a situation where you are not getting your rightful claim so that you can go on with your life and get your vehicle repaired, you should pursue whatever legal channels you need to make it right. Insurance companies should be held accountable not only for your own case but as an example to hold up to others when they fail to come through on their promise to pay a claim.

The very essence of having insurance is to have the assurance of having claims paid in the event of an accident to prevent financial loss and having to pay out-of-pocket. So in cases when an insurer refuses to pay when they should, actions may need to be taken.

That being said, the best solution to making sure you don’t find yourself having to sue your own insurance company is to find the best insurance company at the front end.

Check the Claims Record

When you are shopping and comparing insurance companies, check their claims record. Find out the timeline for paying claims.

Check their website as well as the Better Business Bureau to see what their rating is. If they have a good rating and they are an insurance company, chances are they pay their claims on time.

Ask Others

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It may also be helpful to ask others who have insurance with a company you are considering. This will give you an idea of how well they are handling claims and other issues.

Some online forums focus on the insurance industry and this may also provide some insight into some of the various companies. A quick search for the company you are interested in should prove viable in finding any information you need from outside sources.

Beyond that, use our site to research and check out various companies to see if they offer what you need and can assure you that they will pay your claims when you need to file a claim. If they cannot do this, then they are not the company for you. Keep looking.

We hope that our tips on this site help you to know where to start when you need to pursue legal action against an insurance company. We also hope we can help you to avoid those situations by choosing a great company and policy to begin with.

Shop around and compare before deciding who will choose as your insurance company. Remember you are going to be paying monthly or annual premiums to your insurance company. Make sure you do your research and know that they will pay your claim when you need them to.

Find a car insurance company you can trust by entering your zip in our free search tool below!

References:

  1. http://www.investopedia.com/financial-edge/0211/what-to-do-when-insurance-companies-wont-pay.aspx?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186
  2. http://www.investopedia.com/terms/i/insurance-premium.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186&lgl=no-infinite
  3. http://www.autoinsurance.org/can-i-sue-my-auto-insurance-company/
  4. http://www.wikihow.com/Sue-an-Insurance-Company-After-an-Auto-Accident
  5. http://www.investopedia.com/financial-edge/0211/10-tips-for-getting-the-lowest-car-insurance.aspx?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186