Suing Insurance Companies in Small Claims Court and Winning
All of us buy insurance to protect ourselves and our properties. But what happens when the insurance company does not act as promised?
You have the right to sue your insurance company if they break or fail to follow the conditions outlined in the policy. This includes:
- Failure to pay claims in a timely manner
- Denying claims that have been properly filed
- Making bad faith claims. This occurs when the insurance provider does not want to pay for your claim as promised and justifies their decision with confusing policy jargon.
This article will discuss the basics of filing a lawsuit against your insurance company, and how to use DoNotPay to sue your insurance company in small claims court and receive up to $10,000 in compensation!
Why Might An Insurance Company Deny Your Claim?
An insurance company might give you a variety of reasons for refusing your claim. The list below shows the most frequently used reasons:
- Application Mistakes. Insurance companies might say that you made some false statements on your original application which invalidates the coverage of your policy.
- Lack of Coverage. They might say that your insurance policy does not cover your claim. Take a look at the exclusions section of your insurance policy to learn more about what is covered and what is not. If the outlined policy is confusing, situations are decided in favor of the policyholder instead of the insurance provider.
- Insurance Fraud. Insurance fraud is defined as the submission of false claims, which can result in civil or criminal penalties.
- Claim Mistakes. No matter how trivial, if there is a mistake on your claim, your insurance company can deny it.
- Bad Faith Denial. When the insurance provider simply does not want to pay, they will provide confusing reasons as to why they cannot accept the claim.
Suing Your Insurance Company in Small Claims Court By Yourself
Taking your insurance company to small claims court is an option most people choose. This path is favorable to those who don’t want to hire an attorney and want to avoid hefty legal fees. However, small claims cases still require a payment to file. These are the general steps to sue your insurance company by yourself:
- Ensure your claim qualifies for small claims court, which means that the total amount of your monetary claim needs to be lower than $10,000. The maximum amount varies by state. You can view the different limits here.
- Draft and send a demand letter to the insurance company, in which you will write about the damages you incurred as well as a brief explanation of why the insurance company is responsible for these damages.
- Fill out the court forms that are provided to you by the court and file your complaint.
- Serve the forms to the insurance company. You will have to notify the insurance company that you are suing them and provide them with the official court forms.
- Prepare to make your case and show up for your court date.
Actions That Can Be Taken Against The Insurance Company
Depending on the type of lawsuit, you will need to prove that the insurance company’s actions breached a contract or resulted in significant damages. Below describes types of lawsuits and how your case will be handled in court:
|Breach of Contract Action||In court, you must show how the insurer failed to fulfill the contract's terms. If you have a written copy of the contract signed by both parties and can prove that there is a breach by the insurer, you can win the lawsuit.|
|Bad Faith Lawsuit||You can file a bad faith lawsuit when your insurance firm distorts the language of a contract in order not to pay a claim. An insurance company also behaves in bad faith when they neglect to inform policyholders about policy limitations and exclusions before a purchase is made.|
|Punitive Damages||These kinds of rare cases occur when a court determines that an insurance company’s behavior in handling a policyholder is very unfair and obnoxious that damages in excess of the claim are awarded.|
|Compensatory Damages||When a loss has happened as a result of the insurance company’s negligence or unlawful activity, compensatory damages are given. This includes payments that compensate for losses such as damages, injuries, and more.|
What To Keep In Mind Before You Sue Your Insurance Company
- Any correspondence with the insurer and its employees must be documented for your own record. Save all emails, make notes of phone calls, and write down the key dates and people you spoke to.
- Take note and keep a record of your out-of-pocket expenses such as legal fees, repairs, medical bills, and missed wages. Be truthful in your evaluations and record-keeping.
- Keep track of your insured properties, including invoices and the photographs of the items covered by your insurance policy. Following an incident or accident, take photos of your insured property, such as your home or your car as soon as possible.
Sue Your Insurance Company With DoNotPay
Instead of handling everything yourself, sue an insurance company with DoNotPay! All it takes is a couple of steps:
- Open the DoNotPay on your phone or web browser
- Go to the Sue Now product
- Enter the dollar amount you are owed
- Choose whether you need a demand letter, small claims court forms, or a script
- Describe the issue with the insurance company and submit additional information, such as photo proof
That’s it! You can have DoNotPay mail the demand letter to your insurance company as well. If you don’t receive a favorable response from them, come back to the Sue Now product and get the necessary forms and script to go to small claims court.
What Other Companies DoNotPay Can Help You Sue?
Thousands of users have used the Sue Now product to easily sue in small claims court. DoNotPay can also help you sue: