Can I Sue a Car Insurance Company for Not Paying My Claim?

One of the primary ways to get compensation after a car accident is to file a claim with your or another involved party’s car insurance company.

Car insurance serves as protection from the financial damage that you can experience from car collisions and accidents that harm you or your vehicle. There are varying types of insurance, with some types covering nearly every eventuality and others only covering the most basic scenarios.

No matter the type of coverage you have, insurance companies can be tough to deal with and can pose problems to financial recovery; one such problem is not paying out a claim you file. Before deciding whether to sue the insurance company or take other action, consider the following.

Liability Car Insurance

Liability insurance helps you to be able to pay for any damage you cause to others when operating your vehicle. Due to the dangerous nature of cars, this can also include medical payments alongside car repairs.

Liability insurance is considered the most basic form of car insurance and is almost universally mandatory for anyone operating a vehicle. It is also often the cheapest car insurance. This insurance does not cover injuries you or your car might suffer. Its only function is to compensate the other party if you get into a car accident.

Therefore, you should carry more than liability car insurance, as it does not shield you from the injuries you may sustain. It only compensates the other injured party in a car accident.

Personal Injury Insurance

Personal injury insurance is also known as PIP and is concerned with compensating you and passengers in your vehicle after a car accident. Some states require PIP insurance alongside liability car insurance. PIP insurance protects you and other passengers. PIP usually covers medical bills, and it also often covers additional expenses such as lost income that may stem from injuries in a car accident.

Collision Car Insurance

Collision car insurance is self-explanatory; it only gets paid out when an accident occurs. An accident could be a collision with another vehicle, a solitary object, or just a simple accident. The critical thing to remember about collision car insurance is that it pays to repair your vehicle regardless of the fault involved. Therefore, if you get in an accident where you are at fault, your collision car insurance should still cover the cost of repairing your vehicle. People who lease or rent vehicles commonly carry this form of car insurance. Car collision insurance can come in handy because vehicle repairs are often costly.

Comprehensive Car Insurance

Comprehensive car insurance is concerned with financial compensation for things other than a car accident. Where collision insurance deals with car accidents, comprehensive insurance covers other eventualities such as natural disasters and other unforeseen accidents that don’t involve car accidents. This insurance usually costs more than basic liability insurance.

Medical Payments

Medical payments cover medical bills and other forms of medical costs that may arise after a car accident. For example, if someone sustains an injury after an accident, medical payments will serve as financial aid to help pay off costs from medical facilities. The only difference between this and PIP is that medical payments cover less.

Uninsured/Underinsured Motorist Insurance

Insurance for uninsured or underinsured motorists serves as a financial shield if the driver you get into an accident with does not have liability insurance. If the other driver has no insurance, they may not have a way to pay for the damage they cause to you or your vehicle. Often, this results in the other driver not compensating you at all. Uninsured/underinsured motorist insurance comes in to fill the gap created by the other driver not having liability insurance.

How Does the Claim Filing Process Work?

To activate and use insurance after a car accident, you must file a claim with the insurance company. An insurance policy can only help you if you activate it after certain events occur. For example, you may need to activate your policy after a car accident or a car collision. The claim filing process can be tricky to navigate due to the number of steps required and the plethora of documents needed for submission.

When filing a claim, you first need to contact your car insurance agent or the other party’s car insurance agent. After an accident, make sure to get the other party’s insurance information so you can successfully contact the company. You will need this to collect liability insurance. When you reach the insurance agent, know essential details like the names of everyone involved and the basic facts of the incident.

You may be able to file a claim over the phone or online. Still, you must prepare documentation such as photos, accident reports, police reports, or whatever other documents the insurance company requests. Insurance claims can take weeks to process and sometimes even longer. These companies deal with thousands of claims, and they take time to review all of your documents to come to a decision. The person who decides whether to accept your insurance claim is called an insurance adjuster, and you will be in contact with them for the rest of the process.

An adjuster will give you an estimate of the amount of damage suffered to your and your car and what they can offer you. The adjuster will base their offer on several factors, including the injuries suffered, the type of insurance policy involved, and the individual company’s policy. After the adjuster offers you compensation, you have the option of accepting it or rejecting their offer. However, an insurance company can sometimes deny your claim or refuse to pay out what they promise. Insurance companies can be notoriously hard to deal with in this area.

Ways an Insurance Company Can Refuse to Pay Your Claim

Say you have been in an accident, and you reach out to your insurance company, file a claim, and wait for it to be accepted. You have sustained real injuries to your body and your property, and you deserve compensation. Then, shockingly, your insurance company denies your claim or refuses to pay out what they promised you. There can be several reasons for this, including:

Denial in Bath Faith

On some occasions, the insurance adjuster and company that consider your claim may refuse to pay out your claim outright or by implication. For example, the company could deny your claim and stop communicating with you, or, more likely, the company could drown you in jargon and delay paying you for an extended, unreasonable period.

This type of denial is known as bad faith. Bad faith is simply a party dealing with you in a dishonest, untrustworthy fashion that results in them not fulfilling their end of the bargain. If an insurance company deals with you in bad faith, there will likely be some legal recourse.

Lack of Coverage/Claim Error

Before assuming that the insurance company acted in bad faith by denying or not paying your claim, you must be sure your claim was correct. Insurance terms and conditions are often long and confusing.

Customers commonly do not take the time to read over the terms and conditions to make sure their policy satisfies the situation they find themselves in. When accidents happen, terms and conditions that disallow specific claims might be hidden in the fine print. For example, you could file a car insurance claim to get money to repair your vehicle, only to discover that you can’t file a claim because you didn’t get into a car accident.

Instead, you just hit a stationary object. In this case, it isn’t necessarily the insurance company’s fault that they didn’t pay your claim, as the policy does not cover your claim. Policy exclusions and errors can be very frustrating, as it is challenging to find the different terms within a large, confusing document. In this scenario, it is unlikely you will have legal recourse.

Legal Recourse

Say the insurance company denies or refuses to pay for your claim. What can you do? If the insurance company denied your claim in bad faith, you would likely have a way to achieve legal recourse. As stated before, bad faith means the insurance company reviews your claim and denies it even though you had a good legal claim. They can also act in bad faith by breaking deadlines or not investigating your claim once you file it.

Bad faith generally means the insurance company failed or refused to uphold their end of the bargain made when you took out their insurance policy. When you think an insurance company acts in bad faith, the way to legal recourse could mean filing a lawsuit.

Before filing a lawsuit, you should first consider hiring an attorney. An attorney knows how the legal recovery process works. They can advise you and may be able to help you get compensation without going to court. If your case does go to court, lawsuits can take an extended time to resolve.

Legal procedures require careful consideration by attorneys, clerks, judges, and clients alike. A lawsuit generally begins with filing a complaint to the other party. In this situation, this is the insurance company.

Once you file the complaint, the other party has an opportunity to respond. Then, the process continues as other motions and pleadings are filed. It is usual for either or both parties to seek a faster resolution to the conflict during a lawsuit. This resolution is known as a settlement. In this situation, an insurance company could decide they do not want to go through a lawsuit and offer to pay you a certain amount to settle out of court.

Filing a lawsuit is not the only way to get compensation, however. If you hire an attorney, they can advise you as to whether filing a lawsuit or going to court would be helpful for your case.

If you or a loved one were in an accident and have trouble getting compensation from your insurance company, do not hesitate to reach out to an attorney today. After hearing about your situation, an attorney may offer answers and steps forward to legal recovery.

Nathan Hughey

Nathan Hughey, an attorney and fourth-generation South Carolinian, founded Hughey Law Firm in 2007. Before that, he spent five years defending nursing homes and insurance companies. Leveraging his experience, he now advocates for those injured or wronged by such entities, securing over $220 million in verdicts and settlements.