How To Sue An Insurance Company For Bad Faith

How To Sue An Insurance Company For Bad Faith

suing ATT in small claims court with an app

Insurance companies are set up to mitigate your risks, not compound them. Whenever they leave you feeling distrust, they may have acted in bad faith and it is within your right to question their actions and seek legal recourse against them.

This article will show you ways insurance companies can act in bad faith, and the steps you can take to sue an insurance firm for bad faith using the smart robot lawyer, .

Good Faith v. Bad Faith

When you enter into a contract with an insurer by purchasing any of their policies, you equally activate an implied ‘good faith’ contract which says:

  1. Your insurance firm must always consider and prioritize your interests.
  2. You and your insurance firm must not engage in any action that can affect the ability of any party to reap the benefits of the contract.

Failure to do this means that the company has acted in bad faith.

Types of Insurance Bad Faith

An act of bad faith in insurance is a situation where an insurance firm fails to honor its end of a mutual agreement (as stipulated in its policy) or violates state laws regarding its practices. The result is that the insurance firm may have:

  • Refused pre-agreed claim settlement
  • Refused settlement for the fair amount of a claim
  • Dishonored the claim settlement timeframe
  • Unexplained refusal to settle a claim
  • Manipulated a claim’s true value
  • Failed to fully disclose all details of a policy at the point of purchase
  • Failed to protect you against unfair third-party claims
  • Subjected you to additional losses or duress due to its unreasonable delay
  • Forced claim settlements to go through the litigation process
  • Violated state laws for the settlement of claims

Depending on your state of residence, the definition of bad faith may either apply to you as a first-party policyholder only or both as a first-party policyholder and a third-party seeker.

Steps To Sue An Insurer For Bad Faith

You can sue an insurance firm for other reasons besides bad faith. If you wish to file a bad-faith lawsuit, especially in small claims court, your aim should be getting your money back or seeking any other form of compensation except punitive damages. Punitive damages against an insurer can only be awarded if you have sufficient evidence to prove that they have acted with willful disregard, malicious or fraudulent intent.

Follow the steps below to file a lawsuit:

Go through your company’s policyAs a necessary first step, you need to check if the insurance firm has violated its rules and regulations.
Gather all evidenceOnce you have determined that there is a breach of contract, you need to gather all evidence to prove this. This may include paper, audio, or video evidence that shows:
  • Records of discrepancies
  • Your complaint and efforts towards remedy
  • The actions taken (or not taken) by the insurance firm
Report to your state insurance departmentIf the company denies any wrongdoing and refuses to address your claim, you can file a complaint with your state insurance department to look into your claim. Your state insurance department will mediate between you and your insurer.
File your bad-faith charges in small claim courtWhen filing bad faith charges, you should make sure that you:
  • Get the correct address of the insurance firm
  • File your case in the state that the firm is registered in

Look up the state small claims court for any specific requirements while filing.

Serve the insurer your lawsuit claim and prepare for the court date. This is necessary to prove to the court that your defendant is aware of the case. Go to court and be prepared to defend your case.

Sue for Bad Faith With DoNotPay

Suing an insurance company by yourself can be overwhelming and complicated. Let DoNotPay handle the work for you! The robot lawyer streamlines the suing process into 4 simple steps:

  • Go to and select the Sue Now product
  • Enter the type and value of compensation you seek
  • Select whether you want a demand letter or court filing forms
  • Describe the reason for the lawsuit and submit any applicable evidence

That’s it! DoNotPay will generate a demand letter or court filing forms for you. The robot lawyer will also mail a copy of your demand letter to the insurance firm on your behalf!

What Else Can DoNotPay Do For You?

Thousands of DoNotPay users have used the Sue Now service to claim compensation as well as seek justice. Here’s a list of companies has helped sue:

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