When to Sue Your Auto Insurer
One of the most common situations that lead a policyholder to consider suing their auto insurance company is a denial of coverage. A good example of this is when a claim is based on a defect in the automobile that should be covered under the policy. If the policyholder’s auto insurance company denies the claim on the basis of the defect being a manufacturer’s issue, then the policyholder may need to sue to obtain coverage payment.
Another situation that might lead to a lawsuit against a policyholder’s automobile insurance company is an unreasonably delayed payment . The threshold for filing suit in these circumstances is high. An automobile insurer must actively be making efforts to avoid a claim payment for there to be a bad faith claim or need to pursue litigation.
A final common situation leading a policyholder to consider suit is an unfair settlement offer by the insurance company. The policyholder might lack a complete understanding of the value of the claim and receive a compelling offer from the insurance company. If the proposal is unfair or unreasonable, litigation may be necessary.
Reading Your Auto Insurance Policy
You might be surprised to hear that the auto insurance company owes you more than just the lawfully required covered benefit. In addition to paying for proper benefits, they also have a legal and ethical duty of good faith to fairly, truthfully and honestly handle your claim. Every time you file an auto insurance claim, you need to review your policy and your rights to recover all the benefits that you have properly purchased. One of the methods that an auto insurance company may use to shortchange your claim is to try to set off or deduct from your claim, any additional cost that they may argue is not directly related to the accident. This is a good point of debate and discussion to challenge with your attorney.
Your auto insurance company has a contractual duty of good faith to reasonably pay claims and benefits as lawfully requested. Your policy with them is a contract, so their obligations arise from the policy language, and the policy language is strictly construed against them to favor your rights if the language of the policy is ambiguous or subject to different interpretations.
One of the best ways to determine if you can sue your auto insurance company is to review your policy terms, review the policy exclusions and limitations, and then if you can still make a claim, determine if your auto insurance company has failed to meet their contractual obligations to you. If they have failed to meet their contractual and legal obligations, you may well be entitled to sue them in a court of law. It would be advisable to first have a conversation with your insurance agent to discuss any uncertainties in your policy interpretations. If after you speak to your insurance agent there are still questions, it is time to consult with an attorney to determine if the insurance company is acting in bad faith.
Reasons for Suing an Auto Insurance Carrier
When considering legal action against one’s auto insurance company, there are several legal grounds upon which a policyholder may base their lawsuit. One of the most commonly cited grounds is breach of contract; basically, the policyholder claims that the insurer has breached its contract with the policyholder by failing to provide coverage that the policyholder has paid for. For example, if the policyholder has a clause within their insurance contract that promises that full reimbursement will be provided for rental costs should the policyholder need to have their vehicle repaired, then that policyholder has a right to get full reimbursement should the need for a rental car arise and the auto insurer refuses to cover the cost.
Another common legal ground for suing an insurance company is bad faith, which is one of the legal concepts that underlies most breach of contract lawsuits in the world of insurance. A policyholder may sue their insurance company for bad faith if they feel that the insurance company was proactive in trying to avoid paying a legitimate claim, to any extent that the insured feels is unreasonable.
How To Sue Your Auto Insurance Carrier?
If negotiation fails to produce a satisfactory result, taking legal action with the help of an experienced auto insurance lawyer may be necessary. Filing a lawsuit against your auto insurance company is generally not a lengthy process, but there are several steps you need to complete to ensure the best possible outcome. These steps include: Gathering Evidence – The moment you suspect that your insurance company is acting in breach of its contract, contact your attorney for immediate guidance in collecting important evidence. Good documentation is crucial in a lawsuit against an auto insurance company. Your attorney will advise you on exactly what information you should collect, including: Hiring an Attorney – Consider hiring an attorney who specializes in auto insurance claims, as he or she will be well versed in the law and able to best represent your interests. You may also want to research several attorneys online to verify their education, experience and any disciplinary history. You will also want to meet with several candidates before making your final selection. Be sure to ask about an attorney’s fee structure and to explain your situation in full . You should also confirm whether you have to pay any legal fees up-front, or if you can wait to pay them until you receive your settlement money. Understanding the Legal Process – In layman’s terms, the process of filing a lawsuit against your auto insurance company is quite simple. The steps typically include: filing your complaint, your insurance company’s response, "discovery" (the process of exchanging information), trial and judgment (if your case proceeds even that far.) If you’re unsure about any of the steps or feel you need help at any point along the way, speak with your attorney. He or she should be able to explain the process in a clear and understandable manner. Timelines – The judge in your case will likely give a specific timeline to both you and the defense attorney for each step of the litigation process. It’s important to take note of these timelines to ensure the case moves at a fast pace and does not drag on for years with no resolution. Keeping under the timeline as much as possible is often to both parties’ benefit, and will ultimately save both time and money.
Suing Your Carrier: Alternatives to Starting a Lawsuit
Alternative dispute resolution options with insurance organizations can be beneficial in being an informal process that can save time and money for all parties involved in a personal injury dispute. They are based on the premise that both the policyholder and the insurance organization simply want a quick, fair and reasonable settlement based on the facts. Unfortunately, this is not always the case. These alternative dispute resolution processes include conciliation, mediation and arbitration.
Conciliation involves a neutral third-party who helps the disputing parties come to an agreement. Conciliation is a seamless process, so much so that parties often do not realize that they are participating in it. The conciliator seeks to eliminate any communication barriers between the conflicting parties to reach a desired outcome.
Mediation involves a neutral impartial party that helps the conflicting parties come to a resolution and then works to ensure that the agreed upon terms are adhered to by both parties. If either party fails to perform his or her part of the agreement, the other party has to seek a court order to force enforcement of the agreement.
Arbitration involves an independent party that decides the outcome for the conflicting parties. Unlike the previous two processes, arbitration is binding. The result cannot be challenged even if the arbitrator’s decision were deemed unjust.
Conciliation, mediation and arbitration can be accomplished with a substantial amount of efficacy depending on the circumstances of the dispute and what each party wants out of the arrangement. Although these three processes may appear to be the optimal way to handle disputes, they have some very distinct disadvantages. For starters, they all fail to enforce agreements. If one party chooses to back out of the agreement, the aggrieved party must seek court intervention. Each of these processes also fails to provide a legal remedy for an aggrieved party. In essence, an injured person would have to seek legal relief through the court system or through the applicable department of insurance or another organization.
Possible Outcomes and Things to Consider
As mentioned above, the ultimate decision to sue your auto insurance provider will depend on your specific situation and the details of your claim. You will have to weigh the odds favorably and consider whether the effort is worth it, how much you stand to gain or lose, and how long it may take. Below are some possible outcomes you may experience should you pursue a lawsuit, as well as some important considerations to keep in mind:
You May Receive Additional Compensation If court finds that your insurance company’s conduct of improperly paying your claim in full or in part violates the policy provisions or relevant laws, you may receive additional compensation. In some instances, court may require your provider to pay far more than you expected, such as punitive damages or rewards for pain and suffering for policy holders who suffered significant inconveniences due to their delayed or denied payments. In other cases, court may take the amount you were initially owed and then add interest and legal fees, leaving you with about what you would have received had you settled the lawsuit out of court.
You Might Get More Valuable Insight Into the Process Going to court might help you better understand how changes you don’t want to insure may ultimately affect your policy. For example , you might be more likely to back down in future negotiations if you understand how poorly your insurance plan covers a particular type of driver or vehicle. Wiser from the experience, you may even be able to use your experience to negotiate an even better deal with a new provider.
You May Have More Success Appealing Your Provider’s Decision Should you decide to appeal your provider’s decision, heavier involvement in the process may actually help you make a more convincing argument in favor of consideration. If it’s clear that you’re willing to go to court over the issue, your provider may be more likely to carry its weight and ensure proper compensation on your behalf.
The Litigation Process May Require a Significant Investment of Time and Money Even if you go to court and win your case, you may end up investing precious time and resources that could have been used to pay for your vehicle repairs or a replacement vehicle. As such, it’s important to keep in mind that you may end up spending a significant amount on legal fees and other litigation-related expenses even if you win. It’s often better to try to settle matters out of court, as this involves less risk and expense on your part.