You count on your car insurance company to hopefully offer a smooth claims process and to cover damages after an accident. If your provider denies your claim or gives a ridiculously low payout, you may wonder whether you can sue your auto insurance company.
While you can sue your auto insurance company, it’s only worth it in certain situations. Make sure to consult a lawyer before starting a suit to confirm whether you have a viable case or not.
If you’re looking to change providers, we’ve reviewed the best auto insurance providers to find out which are both trustworthy and affordable. Get free quotes from various auto coverage options to determine the insurers that will keep you safe down the road.
Can I Sue My Auto Insurance Company for Denying a Claim?
Yes, you can sue your auto insurance company if a claim gets denied after an accident, but only under certain circumstances. Below are a few valid reasons to sue a car insurance provider:
- Extremely delayed claim payout
- Inadequate or drawn-out claim investigations
- The denial of a properly filed claim
- The payout was less than originally agreed upon
- The denial of a claim in bad faith
- If a claim is denied without explanation
It’s extremely common for policyholders to sue auto insurance companies, but these drivers don’t always win their lawsuits. Providers reserve the right to deny some insurance claims, so carefully read your contract and all exceptions and disclaimers outlined in it. You won’t win a suit against your auto insurance company if it denies a claim in good faith and without a breach of contract.
You’ll likely want to set up a free consultation with a personal injury attorney before deciding to sue your auto insurance company. This free case evaluation will let you know whether it’s worth going through the insurance litigation process with your own insurance provider.
Understand What Types of Coverage You Have
Insurance isn’t always a simple subject to figure out, but it’s one that you’ll need to consider if you plan to sue your auto insurance company. Know that your personal medical bills won’t be covered if you only had liability insurance on your motor vehicle, as that cheap car insurance type just covers others after you cause an accident.
Also know that you’ll need uninsured motorist coverage or underinsured motorist coverage to receive payouts after getting hit by one of these drivers. You can sue the individual driver for medical expenses or property damages, but suing an insurance provider won’t work.
Alternatives to Suing Your Auto Insurance Company
Unless a driver has an almost indisputable case against their car insurance provider, they often have a hard time winning in court. That’s because most insurers work with experienced lawyers who may be difficult to stand up against in a lawsuit.
You can sue your auto insurance company, but it’s likely to be a long and expensive process. Between the elevated costs, added stress and lack of a guarantee that you’ll win, heading to court may not be your best move after a claim is denied.
Below are a few ways to settle your claim before suing your auto insurance company. Proceed down the list only if the prior strategies don’t solve the problem:
- Carefully read over your claim: Make sure that your claim is accurate and that you’re not overlooking the reason your claim was denied after an accident.
- File an appeal for your claim: To dispute your claim with an auto insurer, you’ll need to give details about the claim along with any documentation from the car accident. This includes images of the damage, police reports, receipts for bills you’ve paid for and any communication you’ve sent to or received from the insurer.
- Go to claim mediation: If you head to mediation, a neutral third party will listen to both sides and attempt to provide an amicable solution for each. While you may not receive as significant a payout as in court, it’s usually best to take what you can get in mediation to avoid the time, hassle and potential expenses associated with a lawsuit.
- If all else fails, you can head to court: Don’t sue your auto insurance company without considering the time, effort and expenses you’ll have to deal with. It could take years to move your case through the legal system, and you could face lawyers with experience in fighting off lawsuits. The potential payouts are huge, but it could cost you in the end.
One other option is to file a complaint with the department of insurance in your state. While you won’t have to head to court, the most likely outcome is that the department will deem the insurer’s denial valid and will order you to drop your potential lawsuit.
Should I Consider Trying Out Small Claims Court?
It will be a much less prolonged process if you head to small claims court to address your personal injury or property damage claim. The at-fault party will be determined much quicker by taking your accident claim to this type of court because the maximum payouts are far smaller.
Small claims courts have maximum payouts that vary depending on state insurance laws. Accident lawyers can sue for up to $20,000 in damages in Texas, while the maximum payout is only $2,500 in Kentucky and Rhode Island. Maximums range across the remaining states, with California law allowing up to $10,000, Florida up to $8,000 and New York usually up to $5,000.
Why Do Auto Insurance Companies Deny Claims?
Your car insurance company may offer a range of reasons for denying your claim. Some of the most common ones are listed below:
- Lack of relevant insurance coverage
- Application and claim errors
- Auto insurance fraud
- Bad faith denial
Claim errors are very common and important to keep in mind. One common example is not notifying your insurer in time, which in some cases is as short as 24 hours.
Insurance companies won’t explicitly give bad faith denial, but they often use legal language and fine print to deny your claim. Since providers lose money when they pay out claims, they often attempt to deny as many car insurance claims as possible. Those who prove that their insurer gave a bad faith denial may be able to sue for punitive damages under the tort system.
If you’ve got a strong argument for your claim, then you can sue your auto insurance company. Make sure to hire a reputable law firm, even if it has higher attorney’s fees, and prepare for what could end up being a drawn-out process to receive a fair settlement.
Our Recommendations for Auto Insurance
If you plan to sue your auto insurance company, you’ll likely be in the market for a new one. We recommend considering GEICO, Progressive and State Farm as potential replacements to get multiple car insurance quotes from. While no car insurer is guaranteed to pay out for claims, these companies are known as legitimate providers and are backed by strong financial health.
GEICO: Best Overall
GEICO is our choice for the Best Overall coverage due to its excellent industry reputation and A++ financial strength rating from AM Best. The company typically has competitive premiums and offers discounts for your car having safety and security equipment, for being a good student or for being a responsible driver.
Progressive: Best for High-Risk Drivers
If you’ve been in a recent auto accident or received a speeding ticket or DUI violation, it may be smart to consider Progressive. The provider is known for accepting high-risk drivers who may be rejected by other leading auto insurers. Read our Progressive insurance review to find out more about working with the company.
State Farm: Best Student Discounts
With local insurance agents spread across the country, State Farm is generally known as an accessible company despite its large size. Drivers benefit from its wide range of discounts, especially those intended for students, along with its A++ financial strength score from AM Best.
Frequently Asked Questions (FAQs)
How to sue an insurance company without a lawyer?
It’s far easier to sue an insurance company with a lawyer. You can do it yourself, though, by talking to the insurance adjuster, carefully studying your auto insurance policy and sending a letter to your insurance provider. Know beforehand that the process may be longer and more expensive than you’d imagine at first.
Can I sue my car insurance company for taking too long?
Yes, you can sue your automobile insurance company if it takes too long to address your claims. You could do this if the length of the delay was “unreasonable.”
Can I sue my insurance company for emotional distress?
Yes, you can sue your auto insurance company for emotional distress. Keep in mind that you and your lawyer will have to prove that you suffered emotional distress due to the actions or negligence of the car insurance company.
Can I sue my insurance company if I was at fault?
It’s possible to sue your insurance company even if you were the at-fault driver, but this can be tricky. It’s unlikely that you can win your case if the insurer denied your claim when you were clearly at fault. If your insurance company decides you were at fault and third parties agree, you will not win a suit claiming you weren’t responsible.
Methodology
The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system takes into account market share, coverage, auto insurance rate estimates generated by Quadrant Information Services, customer satisfaction and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
We recommend auto insurance companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.
