Sometimes insurance companies do not act in the most upstanding manner. If you have an insurance policy in place, an event happens giving rise to a claim on that policy, and the insurance company does not act as it is supposed to (by...
This article was co-authored by Clinton M. Sandvick, JD, PhD. Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013.
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Sometimes insurance companies do not act in the most upstanding manner. If you have an insurance policy in place, an event happens giving rise to a claim on that policy, and the insurance company does not act as it is supposed to (by denying your claim, delaying payment, paying you less than you are owed, etc.), you may have to resort to litigation to get the money you deserve. Understanding on what grounds you can sue, and the process for bringing the suit itself will help you if you find yourself in this frustrating situation.
Sue your insurance company if it unreasonably delays payment of your claim. Insurance companies are in the business of making money. The longer an insurance company takes to pay a claim, (1) the longer it can hold on to the money it owes you and use that money for its own purposes and (2) you might find yourself in a position where you really need the money and therefore become willing to settle for less than the amount they should have paid you. Insurance companies are obligated to pay valid insurance claims in a timely manner.[1]
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If your insurance company has unreasonably delayed payment of your claim, you can sue it in order to force it to pay the amount it owes you.
Make sure to ask your insurance company for the reason it is delaying payment of your claim, and ask them to put this reason into writing and send it to you. You will need this as evidence later on.
Sue your insurance company if it tries to settle your claim for an unreasonably low amount of money. Once you make a claim, you and your insurance company will engage in a negotiation process, where the insurance company tries to talk you down from the amount you request to cover your losses.[2]
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While you may be able to reach an amount both of you agree on, sometimes your insurance company will refuse to offer you anything but a small amount of money (i.e., not enough to cover your loss) and hope that you will take it instead of trying to fight the company over the amount. If this is the case, you can sue the insurance company because it is unwilling to cover your losses in a reasonable manner.
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