Denied Insurance Claim: when do I file a lawsuit?
When Should I consider Suing My Insurance Company?
You can sue your insurance company if they violate your homeowners insurance policy. Common violations include denying valid claims or only partially paying valid claims.
Dealing with property damage can be stressful. So, if you’re forced to battle your insurance company on top of that, it’s easy to feel overwhelmed. Find out the best way to deal with an insurance company that is not treating you fairly.
Reasons an Insurance Company May Deny Your Claim
An insurance company has a host of common reasons to give you for denying your claim, some legitimate, some not. Some of these reasons include:
Lack of coverage: They may argue that your claim isn’t covered by your insurance policy. Examine your policy’s exclusions section to better understand what’s not covered. Under Florida law, ambiguities in the policy are judged in favor of the policyholder, not the insurer.
Claim errors: Check your policy to see what the requirements are for notifying the insurance company of a claim. While insurance companies often claim insureds waited too long to file a claim, this is not always true. It depends on what your policy says.
Application errors: An insurer may claim you made certain misrepresentations on your original application that nullify the coverage of your policy.
Depreciation: Insurance companies often like to reduce your payment by a “depreciation” amount which is not intended on replacement cost value insurance policies.
When Can I Sue the Insurance Company for Denying My Claim?
Every insurer has many obligations to its policyholders. They must abide by the terms of the contract (the policy), act in good faith, and avoid unfair trade practices. Typically, insurance companies cannot do the following:
An incomplete or delayed investigation into your claim
Refuse to pay a claim where liability is clear
Fail to approve or deny a claim within a reasonable or specified timeframe
Deny a claim without adequate explanation as to the reason for the denial
Deny a claim based on an application misstatement after the period of contestability has past
Tips for Suing the Insurance Company for a Denied Claim
Whether you’re currently considering suing your insurance company or not, it’s always best to be prepared and keep detailed records. Some ideas to keep in mind include (also check out our previous article with even more suggestions here):
Document any correspondence with the insurance company. Keep copies of emails and take notes of phone conversations, including dates and the names of representatives. Remain polite on the phone and assume they’re recording your calls.
Maintain records of your insured property, including receipts and pictures of the insured property. It is always a good idea to take pictures.
Keep track of expenses you incur if you need to protect the property from additional damage. It is always a good idea to speak to a lawyer before changing the state of the property.
Choose an attorney with extensive experience in insurance litigation. Insurance law can be complex, time-consuming, and expensive.
If you do decide to sue your insurer, having this sort of documentation will help your attorney present a strong case.