Insurance policies give a sense of security and protection against unexpected events.

However, it is not uncommon for insurance companies to deny claims or offer a low settlement amount.

If you believe your insurance company is acting in bad faith, you may want to consider taking legal action against them.

In this guide, we will provide you with the information you need to know about suing your insurance company for coverage.

Understanding Bad Faith Insurance

Before discussing when to consider legal action, it is essential to understand what bad faith insurance means.

Bad faith insurance refers to the act of an insurance company denying a policyholder’s claim or failing to fulfill its obligations under the policy.

Insurance companies are required to operate in good faith, which means they must act honestly and fairly towards their policyholders and reasonably investigate claims.

When insurance companies act unreasonably, unfairly, or dishonestly, they are said to be acting in bad faith.

There are different ways in which an insurance company can act in bad faith. Here are some examples:

– Denying a valid claim without providing a reason
– Failing to conduct a reasonable investigation
– Offering an unreasonably low settlement amount
– Delaying payment without justification
– Misrepresenting policy coverage or exclusions
– Refusing to defend a policyholder in a lawsuit

If you feel that your insurance company has acted in bad faith, it is important to gather evidence to support your claim.

This may include emails, letters, recordings, and other documents that show how the insurance company acted unfairly or unreasonably.

When to Consider Legal Action

If you are dissatisfied with your insurance company’s handling of your claim, you may wonder when it is appropriate to consider legal action.

Here are some situations in which you may want to consider suing your insurance company:

1. Your Claim Has Been Denied

If your insurance company has denied your claim, you may want to consider legal action if you believe the claim was valid.

Before taking legal action, review your policy to ensure that your claim is covered under the terms of the policy.

If you are unsure whether your claim is covered, consult with an attorney.

2. Your Claim Has Been Delayed

Insurance companies are required to process claims in a reasonable amount of time.

If your insurance company has unreasonably delayed payment or investigation of your claim, you may want to consider suing them.

3. Your Settlement Amount Is Unreasonable

If your insurance company has offered a settlement amount that is unreasonably low, you may want to consider legal action.

An attorney can help you determine whether the settlement offered by the insurance company is fair based on your policy and the extent of the damages.

4. Your Insurance Company Is Acting in Bad Faith

If you believe your insurance company is acting in bad faith—for example, by misrepresenting policy coverage or refusing to defend you in a lawsuit—you may want to consider suing them for bad faith.

Steps to Take Before Suing Your Insurance Company

Before suing your insurance company, there are several steps you should take. First, contact your insurance company and try to resolve the issue through negotiation.

Explain why you believe their handling of your claim was unreasonable and provide evidence to support your claim.

If negotiation fails, consider hiring an attorney experienced in bad faith insurance claims. An attorney can help you understand your rights and guide you through the legal process.

Besides hiring an attorney, it is important to document everything. Keep records of all communication with the insurance company, including emails, letters, and phone calls.

You may also want to get statements from witnesses and gather any other evidence that supports your claim.

In some states, before filing a lawsuit against your insurance company, you may be required to participate in mediation or arbitration.

These alternative dispute resolution processes can help you resolve your dispute without going to court.

Conclusion

Suing your insurance company for coverage is a serious step that should only be taken when all other options have failed.

If you believe your insurance company has acted in bad faith, it is important to gather evidence and consult with an attorney before taking legal action.

By taking these steps, you can increase your chances of obtaining the coverage you are entitled to under your insurance policy.