How To Sue Insurance Company For Property Damage

Property insurance protects your property, but insurers don’t always fulfill their promises.

Facing claim denials, delays, or low settlements?

You might be thinking about suing the insurer or its adjuster.

This article covers suing an insurance company for property damage claims and when it’s appropriate to do so.

How to insurance company
How to sue insurance company for damages: photo source (Claimsmate.com)

Wondering if you should take legal action against your insurer? Keep reading.

Note: Every insurance claim is distinct, and a universal solution doesn’t exist, particularly for disputes and denials.

The following tips offer general information, not personalized advice or legal guidance.

Can You Sue An Insurance Company Over A Property Damage Claim?

You can sue your insurer for various reasons linked to property damage claims.

If they act in bad faith, wrongfully deny your claim, cause delays, confusion, or engage in dishonest practices, you might choose to sue.

Insurance is a binding contract where the company must cover losses as outlined.

Failure to uphold this contract can lead to legal action against the insurer.

When to Sue your Insurance Company

Situations to sue your insurer: Contract violations, inadequate compensation, wrongful denial, or unresponsiveness.

States impose legal rules on insurance companies, including timely response and payout.

Complaint filing with state’s insurance department can resolve problems, aiding potential lawsuits.

Some of the most common reasons to sue an insurance company include:

  • Failure to Pay On Time: If the insurance company is taking too long and does not make a reasonable effort to pay out your legitimate claim, then the insured may be able to make a bad faith claim.
  • Unreasonably Low Payouts: The insured may also be able to make a bad faith claim if the insurer offers an unreasonably low amount of money to settle a claim. If your home requires $100,000 worth of damages, for example, and the insurer is offering $15,000, then you may be able to file a bad faith claim.
  • Failure to Represent: Some insurance companies refuse to defend their clients in court. That’s a problem, because most insurance policies require the insurance company to defend the insured in court in certain situations. When an insurer violates this requirement, they have failed to represent the policyholder, and the policyholder may make a bad faith claim against the company.
  • Breach of Contract: Most lawsuits against insurance companies fall under breach of contract. An insured may sue an insurance company if the company fails to follow the terms of the insurance company. The insurer has breached the legal contract.

With property damage insurance claims, lawsuits generally occur because the insurer has offered an unreasonably low payout, failed to pay a claim on time and is taking too long, or breached the contract in other ways.

How to Sue an Insurance Company

To sue your insurer, hire a lawyer experienced in first-party claims and insurance dealings.

Many city lawyers are familiar with insurance claim challenges.

Generally, a lawsuit against an insurance company proceeds like this:

  1. Request a full copy of your insurance policy from your insurance company (if you do not already have a copy in your possession).
  2. Send a written letter to your insurance company requesting them to send (in writing) a denial of your claim, including the detailed reasons your claim was denied. Your letter should also demand a payout for your claim.
  3. Give your insurance company a reasonable length of time to respond to your request. At this point, they may offer a higher settlement or approve your claim to avoid future legal action.
  4. File for an administrative hearing regarding your insurance claim denial with your insurer. This is important because your insurance policy may contain a section requiring you to “exhaust all available remedies” before filing a civil lawsuit. If you fail to exhaust all available remedies, then your lawsuit could be dismissed.
  5. If all administrative and out-of-court options fail, then you can proceed with a civil lawsuit against your insurance company. You will seek payment for your claim through that civil lawsuit.

Also read: How to check if a property is insured?

Consider Hiring a Public Adjuster Before Suing

Lawyer costs can be high. Often, a Public Adjuster suffices to resolve claim issues, avoiding legal expenses.

They work with insurance attorneys if needed.

Adjusters streamline cases, aiming for quick resolution or preparing for lawsuits.

Many policyholders opt for adjusters for their negotiation skills, potentially avoiding costly lawsuits.

While an attorney isn’t mandatory, hiring either signals seriousness, providing expertise in complex insurance law.

Top 6 Tips for Suing an Insurance Company

Tips for suing insurance company for damages
Source (Reddit)

Suing an insurance company can be complicated.

Here are six tips to maximize your chances of winning your property damage insurance claim lawsuit.

Document Everything About Your Claim

Strong documentation eases insurance lawsuits.

Key records include call details, emails, damage visuals, receipts, contractor invoices, estimates, and supporting evidence.

Public adjusters excel at organizing and readying claims, aiding potential legal action.

When an insurance attorney is involved, consider hiring your own legal or adjuster representation.

Their absence gives the insurer an advantage if the claim is stuck.

Excessive Payment Delays Indicate Something is Wrong

Insurers mustn’t purposefully stall payouts. State-specific time limits dictate claim stages.

For instance, in Texas, payment must follow replacement cost agreement within 30 days.

Extended delays breach good faith. Insurance’s role is prompt, fair processing.

Prolonged payout hints at issues.

Don’t Wait Until a Claim is Denied

Claim payout delay? Insurer stalling? Act fast: Get a lawyer or adjuster.

Denied claims are harder to revive.

If problems or bad faith appear, consult a professional during processing.

Avoid Writing Anything in a Letter or Email That You Wouldn’t Want Shown to a Jury

In court, jury sees your insurer communication.

Be sincere, clear, and relatable – not overly legal. Garner empathy:

Highlight timely premium payments, family impact due to delayed payout.

Keep Detailed Timelines

Claim disputes can rely on conflicting accounts.

Prevent this with a timeline of insurer communication, noting calls, emails, letters.

Document calls or check laws before recording.

Insurers have records, so gather your proof for a strong defense.

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