Omar Ochoa Law Firm

Can You Sue an Insurance Company? What to Expect

Updated:

September 21, 2023

by

Omar Ochoa

August 30, 2023

April 16, 2024

What happens when an insurance company fails to honor its obligations? Can you sue insurance companies? Absolutely. In this piece, we will be exploring the various circumstances under which suing an insurance company is acceptable and recommended.

If you are dealing with unreasonable claim denials, delays, or requests, the Omar Ochoa Law Firm can potentially help. We are a trusted litigation firm in Texas that has helped hundreds of clients hold insurance providers accountable. Call for a free consultation with a Texas insurance attorney today.

What Can You Sue Your Insurer For?

What Can You Sue Your Insurer For?

The law allows policyholders to take action against bad-acting insurance companies. However, you may not simply sue because you are not pleased with a certain result. There must be an actionable reason underlying your legal action.

Suing an Insurance Company for Denying Your Claim

You have the option to sue an insurance company for denying an insurance claim.

However, there are many valid reasons why insurance companies deny claims, including:

  • The policyholder fails to pay premiums;
  • The claimant claims coverage not listed in the insurance policy;
  • The claimant was provided false information by an insurance agent when they first purchased their policy;
  • The claimant provides false information during the insurance claims process;
  • The claimant fails to report the incident to the local authorities in a timely manner;
  • The claimant fails to inform the insurer of the incident in a timely manner;
  • The claimant turns out to be liable for the incident;
  • The insurer contests the causes of the claimant's injuries or claims they were pre-existing;
  • The insurer disputes the extent of the claimant's injuries or the property damage involved;
  • The claimant lacks evidence to prove someone else was liable for their injuries.

However, if the insurance company fails to give you a valid reason for denying your claim, it is likely acting in bad faith. In other words, you can sue if the insurer does not give you a valid reason for your denied insurance claim, such as one of the reasons listed above.

Suing an Insurance Company for Negligence

Suing an Insurance Company for Negligence

It is possible to sue an insurance company for negligence as well as for gross negligence. Negligence occurs when one party breaches its duty of care to another and causes losses. Gross negligence is an aggravated form of negligence. It happens when a party's negligent actions demonstrate a disregard for the safety of others.

Examples of negligence and gross negligence on the part of an insurer include:

  • Failure to provide agreed-upon coverage, or failure to inform the claimant of all policy options;
  • Failure to adequately explain policy coverage or outright lying about coverage;
  • Failure to perform contractual duties, such as communicating with the claimant and investigating the incident thoroughly;
  • Failure to notify the claimant of the insurance company's approaching insolvency.
  • Failure to inform the policyholder that their policy was soon to expire is another example of negligence that could be the basis of a lawsuit.

Suing an Insurance Company for Bad Faith

Suing an Insurance Company for Bad Faith

Another way to sue an insurance provider is to allege bad faith. Bad faith occurs when an insurance company engages in dishonest practices or fraud when dealing with claimants.

Examples of bad faith insurance in action include:

  • Delay or denial of payments without a valid reason;
  • Failure to respond to a valid claim;
  • Conducting an inadequate and delayed investigation;
  • Asking for more evidence when enough has already been presented;
  • Overall uncooperative behavior at every stage.

Failure to honor coverage that applies to the claimant's circumstances is another common basis for bad-faith insurance lawsuits against large insurance companies.

Suing Insurance Company for Delayed Claims Processing

Insurance companies have to address valid claims from policyholders promptly. Failure to do so without a reasonable explanation can cause serious losses for a claimant. Fortunately, claimants can use unreasonable delay as a basis for seeking damages for their losses.

Steps to Take Before Suing an Insurance Company

When it's time to file suit against an insurance company, there are certain steps you should take to help ensure optimal results. In every case, it benefits claimants to seek guidance from an insurance attorney. Doing so gives a claimant the highest chance of success.

  • Review the terms of your policy: Before taking any legal action, you want to first make sure you understand everything within the four corners of your policy. What is covered? Are there any exclusions? Without a thorough knowledge of your policy terms and coverage, you are likely to waste time and money;
  • Gather evidence: To be successful in your legal action against an insurance company, you must have evidence. Therefore, you must document the communications between you and your insurance company;
  • Attempt dispute resolution: Filing a lawsuit is not the only way to hold an insurance company accountable. There are alternatives to lawsuits that may make more sense in certain circumstances. For example, mediation is a way for two parties to reach an agreement on an issue. It is facilitated by a mediator who works to make both sides satisfied. The final decision reached in a mediation session is made by both parties;

Arbitration is also available to help settle disputes. However, with arbitration, an arbitrator makes the final decision and not the parties, as is the case with mediation. If you are unsure as to whether you should file a lawsuit, seek mediation, or go through arbitration, your Texas insurance lawyer will help you make the appropriate choice.

The Omar Ochoa Law Firm is ready to help you get the payment you deserve. Call today for a free consultation.

What to Expect When Suing an Insurance Company

Suing Insurance Company for Delayed Claims Processing

Suing an insurance company is a complex matter. You should hire an attorney as soon as possible before doing anything else. They will handle all of the complexities and navigate the process for you.

During the lawsuit, you can expect the following:

  • Your attorney and the insurance company will carry out investigations;
  • You will spend money on various costs associated with your lawsuit;
  • You will sit for a deposition during which you must answer questions under oath;
  • Failure to reach a settlement agreement will lead to a lawsuit;
  • You will potentially have to testify as a witness;
  • You will have to put your confidence and faith in your attorney, so choose who represents you carefully;
  • You will participate in settlement and mediation conferences;
  • You will have to make certain decisions and weigh factors relating to settlement offers.

The process can be daunting for those who attempt it alone. But with an attorney, your chances of getting a valid payout and/or payment for the losses you have suffered are much higher. You also get the peace of mind that your claim is complying with all essential rules and conditions — this keeps your claim valid.

How Does the Lawsuit Process Work?

How Does the Lawsuit Process Work?

There are several phases to the lawsuit process. It begins with filing a complaint with the appropriate court and notifying the insurance company of the lawsuit. Once this occurs, discovery will begin. Discovery is the process in which both sides of a lawsuit gather evidence for their respective cases.

  • Filing the lawsuit: Your attorney must file the lawsuit with a court of competent jurisdiction. Filing in the wrong court will get the lawsuit thrown out. Additionally, the insurance company must be made aware of the lawsuit promptly;
  • Pre-trial negotiations: The parties will likely engage in pre-trial negotiations in an attempt to reach a settlement and avoid trial. Avoiding trials saves time and money for both sides;
  • The trial process: If a settlement is unreachable, the parties will go to trial if they have not opted for arbitration or mediation. During the trial, your attorney will present your case to a judge or jury. At any time, both sides could settle before a verdict is reached;
  • Court decision and verdict: After hearing evidence from both sides, the judge or jury will render a verdict, which is binding on both parties but may be appealed;
  • Appeals process: If you get an adverse verdict, you have the right to pursue an appeal. Keep in mind that appealing a verdict can lead to increased court costs.

The lawsuit process is complex and punishes errors. But with attorney representation, you never have to worry about the legalese. Your lawyer takes care of everything for you and fights to make sure you leave no compensation behind.

How Much Can You Sue an Insurance Company For?

There is no cap on how much you can seek from an insurance company in a lawsuit. However, it is important to know that the amount you seek will be based on a variety of factors, including the type of claim filed, the coverage limits listed in the policy, the losses you have suffered, and more.

Let's take a closer look at some of the factors that influence how much you seek in a lawsuit.

Coverage Limits

Coverage Limits

The coverage limits of the policy act as a sort of cap on the amount of money an insurance company must pay. If you have damages that surpass the coverage levels of your policy, you may have to pursue other sources of compensation, such as the at-fault party.

Type of Policy and Damages

The type of policy you have will determine the types of damages you may claim. For example, your policy may allow for only certain types of damages, such as monetary damages, whereas another type of policy will allow monetary damages as well as non-monetary damages.

Bad-Faith Insurance Claims

If your lawsuit is based on bad faith insurance, you may be entitled to compensatory damages as well as punitive damages. Punitive damages punish bad behavior and are appropriate in bad-faith insurance claims.

Actual Damages

Actual Damages

The amount of compensation you seek will reflect your actual damages. In other words, you can't claim compensation totals that exceed your actual damages.

Policyholder's Liability

In some instances, a policyholder's liability will factor into the compensation payout and may reduce the amount the plaintiff receives.

Legal Representation

A seasoned Texas insurance lawyer is likely to recover far more compensation than an inexperienced one. And those plaintiffs without attorneys can expect to receive compensation far below what they deserve if they receive any at all.

Get Legal Help from Omar Ochoa Law Firm

Insurance companies are supposed to cover losses when certain events occur. Sadly, many insurance providers fail to fulfill their duties, leaving claimants in precarious predicaments.

Whether you are dealing with auto insurance claims or claims involving medical malpractice, the experienced insurance recovery lawyers at Omar Ochoa Law Firm potentially help you recover the policy payout you are entitled to. Contact us today for a free consultation!

Omar Ochoa

Omar Ochoa has been nationally recognized as one of the best young trial lawyers in the country. He's represented clients in federal and state courts and arbitrations throughout the United States and internationally. He is highly experienced in a wide range of complex litigation and has handled a variety of cases. He has recovered hundreds of millions of dollars for clients of all types — from individuals to mid-sized business owners to multi-national companies.

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    FAQs

    FAQs

    Can I sue the insurance company myself?

    No. Not if you are seeking maximum compensation. The insurance industry notoriously fights against having to pay out premiums. They employ all manner of tactics to prevent their bottom lines from shrinking. You need an attorney to fight on your behalf to hold them accountable.

    Why will an insurance company take your case to federal court?

    As a strategy, an insurance company may decide to take your case to federal court. It typically does this because it believes that it may get a more favorable verdict at the federal level, and it may potentially be correct. Where your case is heard factors heavily into the success of your lawsuit.

    That said, some insurance cases are so straightforward that it does not matter where they are heard; the result will be the same regardless of venue.

    When suing an insurance company, what is removal?

    Removal refers to the process of taking a case that is pending in state court and removing it to a federal court for adjudication. To successfully remove a case to federal court, a defendant must file a notice of removal in a district court of the United States and explain why they are seeking to remove the case. The time limit for seeking removal to federal court is 30 days from the time the defendant is served.

    Additionally, the party seeking removal to federal court must also file the notice of removal with the state court currently handling the case and all attorneys of record. Once the state court has received notice, it must cease taking any further actions on the case, as it no longer has jurisdiction over the matter.

    What if I can’t afford legal representation to sue my insurance company?

    You actually may be able to afford legal representation because you pay nothing out of pocket, and your initial consultation is free. The lawyer's fee comes from the settlement they win. If they win zero for you, you pay zero.

    How long does a lawsuit against an insurance company typically take to resolve?

    Depending on the issues, you could be looking at a few months to several months or even years. In general, the more complex the case, the more time it takes.

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