What to Do If Your Car Insurance Claim Is Denied
You purchased car insurance and paid your premiums believing that you have secured some protection against a possible accident or injury. But then, when a claim is filed, your insurer refuses coverage. What can you do if your car insurance claim is denied? The following article discusses how to handle a bad faith car insurance denial.
What Is a Bad Faith Denial?
When an insurer agrees to provide insurance, it assumes certain duties toward the insured. One important general duty is that the company deals in good faith. An insurer acting in bad faith is seeking to avoid meeting its obligations to the insured. In the context of a car insurance claim denial, the bad faith is the improper investigation of the accident, valuation of the property, or refusal to pay on the claim.
Bad faith insurance claim denials typically result in one or both of two different kinds of legal actions.
- Breach of Contract - In nearly all cases a bad faith insurance claim denial results in a cause of action for breach of contract. By denying your claim the insurer has broken its promise to indemnify you in the event of an accident.
- Tort - A tort, in this context, is a civil wrong. By refusing to pay a valid claim the insurer has breached its duty to you, resulting in your economic injury.
Although the analysis is very similar in both kinds of legal claims, tort claims may provide access to punitive and other damages. The legal actions and damages available depend on your jurisdiction.
Jurisdiction Is Important
Your rights in court will be largely dependent on your jurisdiction's approach to bad faith insurance denials. All car insurance claims are subject to the laws of a particular jurisdiction, in this case it will generally be the laws of your state of residence.
States have developed different approaches for dealing with bad faith insurance denials. Some states have passed laws specifically forbidding bad faith insurance denials. Other states have a tradition of permitting claims of this kind under the common law. The distinction will determine whether the state's lawbooks or caselaw describes the rights and limitations on your case.
Kinds of Damages
Jurisdictions may also differ in the kinds of damages available. They may provide the plaintiff the right to claim one or more of the following:
- Compensatory Damages - Damages intended to remedy the insurer's bad faith insurance claim denial;
- Consequential Damages - Damages intended to compensate the insured for reasonably foreseeable expenses and injuries that occurred as a result of the insurer's bad faith insurance claim denial;
- Punitive Damages - Damages intended to punish the insurer for the egregious nature of their bad faith insurance claim denial; and
- Attorney's Fees - Recovery of the costs of litigation only available where specifically provided by the jurisdiction's law.
Learn More About Bad Faith Car Insurance Claim Denials
Since so many aspects of a bad faith car insurance claim denial lawsuit depend on local laws, the assistance of local legal counsel can be a huge assistance. An insurance company certainly has lawyers representing its interests, and you can also have someone familiar with the system representing yours. Contact a bad faith insurance attorney to learn how they can help you push back against an insurer's unfairness.