What Situations Call for an Insurance Litigation Attorney?

What Situations Call for an Insurance Litigation Attorney?

Insurance companies will make all sorts of promises when they attempt to get your business. They present themselves as an oasis of stability during difficult times, claiming they will help you when needed.

Customers believe the sales talk and are often shocked when the insurance company turns around and denies their claim or offers them far less money than they deserve.

At the end of the day, an insurance company is a business. They will not pay you a penny more than they have to for your claim. Unfortunately, the insurance company does not even want to pay you what they owe under the terms of your policy, and you often must force them to pay you what you rightfully deserve. In this scenario it's imperative to engage an insurance litigation attorney to handle your case lawfully.

Insurance companies know that the more they pay you, the less money they will earn, and they will then need to listen to their shareholders. If the insurance company constantly disappoints the shareholders, executives may lose their jobs.

The Insurance Company Has a Contract With You They Must Honor

At its core, an insurance policy is a contract between you and the insurance company. You pay them premiums in exchange for coverage, and you contain your rights within the language of the contract. However, as with any contract, you may need legal action to enforce your rights.

A court can decide the dispute, especially when it relates to what the contract actually says, as the parties usually have two different interpretations of the contract.

When you have any contention with the insurance company, you need legal help.

Disputes usually fall into one of three categories:

  • The insurance company refuses to pay any part of your claim
  • The insurance company may offer you money, but it is far less than you should get
  • The insurance company commits misconduct that rises to the level of bad faith, making them liable to pay you damages for their conduct

You Need a Lawyer When an Insurance Company Has Denied Your Claim

First, you will need an insurance litigation attorney because the insurance company has denied your claim outright and may state that the terms of the policy claim do not cover your loss.

Alternatively, they may argue that what happened falls into one of the policy exclusions. For example, the insurance company may blame you for what happened, claiming that your lack of maintenance or upkeep was the actual cause of the damage. They might also argue that whatever happened falls outside the language of your policy.

A recent example of a legal controversy resulting in lawsuits was insurance companies' refusal to cover policyholders' losses when COVID-19 lockdowns forced them to shut down their businesses.

Insurance companies either claimed that these losses did not fall under the exact language of the policy or that the losses were considered an exclusion. In turn, policyholders sued the insurance companies.

Courts had to interpret the insurance policy's exact language using principles of contract interpretation. In some cases, the courts sided with the policyholders and have allowed these lawsuits to proceed.

Why the Insurance Company May Deny Your Claim

The insurance company may deny your claim for other reasons, such as claiming that you included a misrepresentation in the application process. Then, they will rescind the policy, leaving you without coverage when you need it the most. They might even investigate the insurance policy to argue that it was never valid in the first place.

In other instances, the insurance company can flag a claim on suspicion of fraud. Insurance companies are using artificial intelligence to detect and combat fraud, causing the company to be overly aggressive in denying a claim and accusing you of misconduct. You may find yourself on the defensive when all you did was try to file a claim in accordance with your contractual rights under the policy.

The insurance company may not deny your claim entirely. Instead, they may take a fine-tooth comb to your claim, agreeing to pay certain parts of it and refusing to pay other line items in your claim. The result is that they end up offering you far too little money to compensate you for your losses.

The Insurance Company May Offer You Far Less Money Than You Deserve

You may need to sue an insurance company because they are not offering you enough money to settle your claim. Once you establish that your losses fall under your policy, you must agree on an amount in a settlement. The insurance company has assigned an adjuster to deal with your case, and the adjuster will review your claim and determine how much to offer you in a settlement agreement.

The insurance company's offer will likely be too low. They may underestimate the value of your damages and exclude certain line items of the claim. No matter what type of insurance is involved, you can expect the insurance company to study your claim carefully, and they may lowball your settlement offer. Insurance companies are not in the business of paying you the total value of your claim immediately. They make you work for it, figuring you will be grateful for what you ultimately get.

It might take months or even years to settle your claim, and it does not matter that you need the money. The insurance company knows that, and they drag things out to increase your sense of desperation and improve their bargaining position. 

Suing the Insurance Company for Bad Faith

A unique situation allows you to sue the insurance company for the damages they caused you. In an ordinary case, you are suing the insurance company to get them to pay your claim in full. However, an insurance company may take things too far.

The two parties should act in good faith in a contract. When one party knowingly and intentionally breaches their obligations, they may have acted in bad faith and the other party can hold them liable for these actions.

Bad faith has a specific legal meaning in the insurance realm, where the insurance company consciously tries to get out of what they owe you within the contract agreement. Bad faith involves dishonest, intentional actions.

Here are some examples of insurance companies acting in bad faith:

  • Failing to investigate your claim promptly
  • Arbitrarily denying your claim without giving a reason
  • Refusing to pay a valid claim that you have filed
  • Misrepresenting the actual language of your policy
  • Threatening or otherwise abusing you during the claims process
  • Making unreasonable demands for documentation
  • Failing to communicate with you during the claims process
  • Making you a far lower offer than the value of your claim

Bad faith claims can protect you against egregious insurance company conduct. You may recover substantial financial damages when you prove that the insurance company acted in bad faith.

Your Damages in a Bad Faith Lawsuit

When you win a bad faith lawsuit, you can receive the following in damages:

  • Your actual financial losses from the insurance company's conduct
  • The emotional distress that the insurance company has caused you
  • Any costs to treat the pain that you have suffered
  • Lost income, if your earnings capacity was diminished by what the insurance company did

The element of bad faith damages that scares the insurance company the most is punitive damages. An angry jury can send a message to the insurance company by awarding substantial punitive damages. Courts have ordered insurance companies to pay millions of dollars, even when the claim is much smaller. Sometimes, the prospect of a bad faith lawsuit will bring the insurance company back into compliance during the claims process. Once you shine the spotlight on them, the insurance company may take a step back.

The Insurance Company Will Not Listen to You Without a Lawyer

The insurance company will simply not take you seriously on your own. They do not have to fear an individual claimant who may not have the legal knowledge or muscle to pursue full compensation from them in court. You may try to persuade them to seek more money, but it is rarely enough without competent legal counsel crafting your arguments and building a strong case.

When an insurance company sees you have an insurance litigation lawyer, they realize you have a better chance of holding them accountable. They know that an attorney is advising their client on whether to accept a settlement, and they may be more motivated to settle the case for a favorable amount.

Hiring an Attorney Gives You a Credible Threat of Litigation

Litigation is your own ace in the hole. The insurance company will need to spend money to defend itself in court. Your attorney works for you on a contingency basis, but defense attorneys for insurance companies either bill by the hour or per case.

Litigation costs can be burdensome for an insurance company's bottom line, so the prospect of litigation can make them act more reasonably. They will notice when you approach them with a tough attorney, especially when a lawyer has a reputation for making them pay.

What an Insurance Coverage Disputes Attorney Can Do for Your Case

When you hire an insurance coverage attorney, they may:

  • Review the language of your policy to determine whether you deserve compensation for your losses
  • Communicate with the insurance company on your behalf
  • Estimate the value of your losses that the insurance company should cover
  • Prepare and file the claim with the insurance company
  • Negotiate a settlement that results in full and fair payment by the insurance company
  • Litigate your case in court if the insurance company will not pay your claim or they will not pay you enough

Your Attorney May Negotiate a Settlement on Your Behalf

While you need to hire an insurance litigation attorney, most cases do not end up in front of a jury. When an attorney represents you, the insurance company often sees that you mean business.

Most lawsuits will result in a settlement agreement before they end up at trial. Both you and the insurance company have reason not to want to go before a judge or jury.

First, you lose all control of your case, and there is a risk that you receive no compensation.

Second, taking a case all the way to trial takes a significant amount of time.

From the insurance company's vantage point, the court can order them to pay more than they might have in a settlement. Then, they need to fear a possible bad faith allegation.

You Do Not Pay Upfront to Hire an Insurance Coverage Disputes Attorney

Insurance dispute attorneys will work for you on a contingency basis and will not ask you to pay them anything out of your pocket. Instead, an attorney receives payment if and when you win your case, and there is no risk to you. You need an attorney to have a chance of getting a successful outcome in your case. Hire an experienced insurance dispute lawyer today to get the settlement you deserve.

Time Is of the Essence When Hiring an Insurance Litigation Attorney

Statutes of limitations are critical legal time frames that dictate the period within which you must initiate a lawsuit. In insurance dispute cases, these limitations vary by jurisdiction and the type of claim. Typically, they range from one to ten years, with complex factors influencing the exact duration.

William H. Jones, Insurance Litigation Attorney
William H. Jones, Insurance Litigation Lawyer

For instance, property damage claims may have a different limitation than personal injury claims. You must understand these limits, as missing the deadline can result in the loss of the right to pursue a lawsuit. Moreover, insurance policies may have specific provisions detailing when you must file a claim.

Immediately consult an attorney experienced in insurance disputes at King & Jones to navigate these intricacies and ensure that you initiate legal actions within the prescribed time frames. Acting promptly not only preserves your legal rights but also enhances the likelihood of a successful resolution in insurance dispute cases.