Understanding Policyholder Rights
When you enter into an agreement with an insurer, you should understand the basic rights you have as the policyholder. This understanding is essential when filing an injury claim.
First and foremost, you have the right to be treated fairly and in good faith. Legitimate claims filed and meeting all of the requirements of your policy must be fully honored, whether they are for personal injury damages or damages to your property. This means that your insurer must not act in bad faith by denying a legitimate claim for personal gain.
When you file a claim with your insurer, you have the right to receive accurate and truthful information and advice about your coverage and the claims process. You also have the right to file an appeal with your insurer if it denies your claim. However, fair treatment doesn’t mean that your claim will be paid because you have filed it. Some claims are legitimately denied because they are excluded under coverage or because you have not paid up your premiums or your premium has lapsed. In such cases, your insurer does have the right to deny your claims.
Fair treatment means, however, that you cannot be denied a claim for an injury simply because you had a medical condition that was the cause of the accident, or because there was no evidence of trauma on a particular body part. Moreover, fair treatment means that insurers cannot delay payment of legitimate claims either . If your insurer makes you wait for a long time for a claims outcome, your insurer may possibly be in breach of its contract with you.
The best way to deal with a denied or delayed claim is to act quickly. Send a letter of support from your lawyer to your insurer if your claim has been delayed beyond a reasonable time frame. If your claim has been denied, you may have to re-open your case and present further evidence or witness statements about your injury. Sometimes witnesses can provide the information and evidence that confirms your testimony about your trauma. In other situations, doctors, employers and co-workers can testify about your inability to work and lead a normal life.
In some cases, your insurer can be liable to you for damages in connection with your claim denial or delay. It is called tort of bad faith. This happens when the insurer fails to act in good faith or breaches the contract that exists between you and the insurer. An example of this would be an insurer that is aware that your claim is legitimate, but fails to pay for some other secret motive or tries to delay payment to force you to sign an early settlement because it knows that by doing so, it can avoid paying you the full amount of your claim. The insurer might also be operating in bad faith if it poorly investigates the claim or ignores valid evidence that supports the claim.
When to File a Lawsuit Against Your Insurance Company
One of the questions we hear most often is when should I sue my own insurance company? The short answer is that you shouldn’t have to. But there are cases where you have no choice but to hit back at your own carrier to get what you are entitled to.
Delays: Sometimes it takes months or even years for an insurance company to pay on a claim. There is nothing wrong with seeking a delay. An insurance company has a right to investigate a claim in an attempt to determine whether the loss is covered or not. Yet, there is a point at which an insurance company’s delay is unreasonable. A long delay can be more than just annoying – it can cause financial hardship and a delayed payment of interest on the amount owed to the policyholder. Although most policies do not pay interest on money owed, some policies do. And even if they don’t, courts have discretion to award interest for being forced to wait for a claim payment. And even if a court does not award interest, there may nonetheless be a claim for other types of damages due to the untimely handling of the claim.
Underpayments: Sometimes the amount of the check sent to the policyholder is too low. The insurance company may not present the full picture of what is owed and may deliberately undercut the policyholder on the claim amount in order to maximize profit. Insurance companies are out to make as much money as they can and claims managers make decisions that are not always in the best interests of the policyholder. Insurance companies will look for ways to cut corners. Insurance companies will not always play fair, but that is why there are laws to protect policyholders and contracts (i.e., insurance policies) that are meant to be enforced (i.e. via a lawsuit).
Denials: Sometimes an insurance company will simply deny a claim outright without conducting any investigation whatsoever. When it does this, it runs the risk of being in breach of contract. An insurance company’s obligation under an insurance policy is to provide a prompt and thorough investigation of a claim. This means obtaining statements, documents, and receipts to substantiate the loss. If an insurance company fails to do so and passes judgment (i.e. denial) too quickly, it may face legal liability under the insurance contract.
Most Common Types of Injury Claims
Injuries that most often lead to someone suing their own insurance company are usually on the severe end of the scale. These include:
Medical Malpractice – When insureds undergo surgery or are treated by a physician and then shortly thereafter suffer further injury or are diagnosed with new medical issues which are attributable to medical negligence. A medical negligent that could lead to pursuing a claim against your own insurance company would be an orthopedic surgeon operating on the wrong leg. This type of injury typically leads to someone suing their own insurance company because the injured party often no longer trusts the doctor who performed the procedure and does not want to risk getting the same doctor for subsequent medical care.
Dog Bites – Unfortunately when an injured person is attacked by their dog or another family pet, the injured party will be suing their own insurance company because the injurious party often cannot afford the medical costs associated with the attack and the injured party is entitled to compensation for those injuries. Also, obviously the injured party cannot sue his or her own dog and if the abuser does not have insurance there is no way to collect. Even if the insurance company tries to avoid liability it is ultimately liable regardless.
Construction Accidents – This can be any construction accident that results in serious injury to either a worker or a visitor to the site. This sort of injury would also lead to a suit against your own insurance company because you cannot sue your employer and if the construction worker is self-employed, he or she may not have enough money to pay for compensation.
Motor Vehicle Accidents – When a motor vehicle accident occurs in which one of the involved parties does not have enough insurance to cover associated medical costs, injured parties are suing insurance companies to cover the injury, even if the injured is suing its own company. For example, if you have a very high deductible and are injured by a driver who has the same low deductible as you do then that person’s insurance carrier is where you will have to seek compensation.
As you can see from these few injury examples, the serious injuries are usually the cause for insurance company lawsuits.
Legal Reasons for Suing
While the decision to sue is never entered into lightly, it is often the only option a victim has for seeking just and fair compensation when their own insurance company becomes uncooperative. Bad faith is the most common legal ground for suing your own insurance company for injuries. When an insurance company fails to handle claims in good faith, they must pay for that failure. Not every unfair claims handling is bad faith, of course. There are exceptions to virtually every situation. The form and manner of review that an insurer must undergo before denying a claim can be quite demanding.
Cases against insurers that involve breach of contract make up a significant percentage of all breach of contract suits in U.S. courts. Such suits, along with lawsuits based on the tort of bad faith, account for a large portion of all litigation between businesses and consumers in the United States. Many insurance companies argue that the term "bad faith" encompasses every cause of action that arises because of an insurer’s breach of its policy or policy benefits. This interpretation is incorrect. Specifically, it is typically held that an insurer is not liable for both breach of contract and breach of the duty of good faith and fair dealing. The two duties are separate.
In a breach of contract claim, the plaintiff has the added burden of also proving the amount of damages. Breach of contract claims are entirely separate and different from bad faith claims. Statutory bad faith acts get a more demanding level of examination under most state laws. A statute typically must be pleaded and proved to make a recovery in addition to that of a contract claim. State law is in flux in this area and must be investigated carefully from state to state. Recent Florida caselaw has declared an insurer to be in breach of its own contract by refusing to pay policy benefits when it is clear that those benefits are owed to the insured.
Insurance negligence, or negligence liability insurance, involves the alleged negligence of insurance brokers, insurance agents, and/or insurance agents who may fail in their duty to obtain or provide insurance coverage. An insurance agent, like a lawyer, has a duty to provide services to clients with the degree of care, skill, and knowledge that a reasonably prudent insurance agent would have under similar circumstances. Whether an insurance agent breaches this standard of conduct is generally a question of fact. A lawsuit may be filed against an insurer for negligent acts, errors, or omissions when the insurer violates its professional duty. Claims should be brought within the statute of limitations period, after which time the plaintiff cannot seek restitution from the insurer.
What to Do Before You Sue
Steps to Take Before Suing Your Own Insurance Company for your Injuries
Gather Evidence
If you are looking to sue your own insurance company, it is crucial to have evidence. The evidence that you gather should include the following elements: the accident report, police report, medical records, photographs, and witness statements. If you are not sure what evidence you need, ask an attorney. An attorney can review the evidence that you have and determine if your case has legal merit.
Consult with a Lawyer
Sometimes, the mere threat of a lawsuit can be enough to spur your insurance company into action. If they take you seriously, they may find a way to compensate you and avoid a lawsuit. Since this isn’t always the case, however, make sure you speak with an attorney. An attorney can review your file and gather evidence on your behalf. A good attorney won’t charge you a dime until you win your case. This arrangement gives them an incentive to work hard on your behalf. Plus , if they don’t win, no one is out any money. Don’t wait until after filing the lawsuit to talk to an attorney. If you assume that hiring a lawyer means you can’t get a fair settlement or quick resolution, you might be mistaken. Sometimes, the insurance agent does not have the power to settle a case. In these situations, you should consider submitting your case immediately to upper management. The insurance adjuster may be more likely to settle their case with senior management rather than go to court. Once your case goes to senior management, ask for alternative dispute resolution (ADR). Most insurance companies’ customer service departments turn to ADR after they’ve exhausted all options. That said, this might be a better option than filing a lawsuit right away.
Possible Outcomes of Your Lawsuit
If you are one of the many people in the state of Illinois to have had to sue your own insurance company, it can feel like a daunting task. It will probably seem like a last option, but the fact of the matter is that there are outcomes, one way or another. While no-one wants to sue their own insurance company, it is the only option for many in order to get their insurance provider to provide adequate compensation for the claim. If you’ve had to get to the point where suing the insurance company seems like your last resort, you will want to know what the possible outcomes could be.
Settlements
The first and least risky outcome is a settlement. Often the insurance company will recognize that you have a case and the potential costs of fighting the lawsuit could outweigh the benefits of refusing to settle your claim. You will generally know if your case is likely to end in a settlement relatively quickly. Often cases that go to settlement will do so within the first half of the court process. This has the benefit of putting money in your pocket quickly and closing out the claim, but it may also be a lower payout than if the case was to go to court.
Court Judgments
The second potential outcome is that your case goes to trial. In front of a jury, you will present your case and the damages you are seeking and the insurance company will do the same. See above for information on the risks and rewards of a jury decision. Essentially there is no guarantee that you will win, so if you choose to go to jury trial, ensure you are confident with the information and arguments being used by you and your attorney.
One of the major benefits of going to trial is the potential for a higher payout. In cases that go to jury, payouts are generally larger than in settlements because all evidence has been presented and the jury agrees on the damages being awarded. However this is not guaranteed.
Impact on Future Coverage
One element that is often overlooked is the impact that suing your insurance company can have on your future coverage. If you are successful in your case, you can often be covered for the damages of the claim you were taken to court over. However, you may not be covered for any future damages to that same property or for any subsequent claims that you make. The insurance company may claim that you previously went to court against them so they are no longer willing to provide you with insurance. If you have had to go to court against your insurance, it is worth inquiring if you still have coverage after the fact. Ask your lawyer what insurance you should be able to get in light of the lawsuit.
What an Attorney Can Do
The Role of an Attorney: As if you’re not already frustrated enough that your own insurance company is making things difficult for you, get ready to go through a legal procedure called "arbitration" that could take a year and a half and then maybe you’ll be in a position to sue your own insurance company.
Fortunately, there is light at the end of the tunnel.
Although you may have just learned about LLCs and subrogation and arbitration, the best attorney to hire is someone who already knows these things.
Getting an experienced lawyer on your side is your best bet to possibly avoiding this frustration and time-consuming process.
Rather than going it alone, it’s your attorney’s job to make sure that you do not deal with the insurance company directly unless it is absolutely necessary.
This allows you to focus on what really matters – your recovery – and not just the logistics of your legal proceedings.
Legal Costs
Suing your own insurance company is not without costs, and you often must pay these costs up front. Even if you have a great case, you might wind up paying that money for nothing. A first step every injured person should take is to review their own policy. There might be a way to get your own company to pay your medical bills even if there was no fault or negligence on the part of someone else. And while it’s true that your own company will get a credit for the amounts they pay out once your case resolves, at least you’ve avoided having to go to court.
But sometimes, the case is too big to be handled on your own. It’s best to find a lawyer who has experience in this type of case and can advise you on your claim. The issue of whether to sue your own insurance company can be difficult to determine because some people feel your insurance company is like a family member. You’ve made those premium payments month after month, and now you want to get something in return. The bottom line is that unless there is health insurance involved or a permanent injury, it just isn’t cost effective to sue.
There are certain costs you might incur when suing your insurance company. You have to pay a retention fee when you sign the retainer agreement. You will also have to pay for the filing fee for the lawsuit. The most expensive cost usually is paying your lawyer , who gets paid his retainer initially. People sometimes think they can begin a case with a lawyer and fire him or her later, but they don’t realize that they are still responsible for his or her law firm’s services. The retainer is charged against the contingency fee (which is only owed if the case becomes a recovery). Lawyers bill their work in quarter-hour increments. So, even though you might think the costs is high, it might make sense to have somebody file a lawsuit than to continue to wait for an insurance company to reply to your letters.
After the case has started and your insurance company has received notice that you’re filing a lawsuit, you will receive the opening papers and a contesting answer from your company. The official deadline for handling the claims process ends with this answer. If you wait until you receive this answer, you will not need to hire your own process server to serve the paperwork. Your insurance company must get you all of your medical records, to include the medical information you have supplied them regarding your injury. But occasionally, your own insurance company can be incredibly difficult to deal with, resulting in delays in getting the proper documentation to file the lawsuit.