Before You Sue Your Insurance Company…

courtroom Everyone has been in the situation where your insurance company does something that causes you a great deal of aggravation. They denied a claim that you strongly believe they should have covered. They made a big mistake in your billing statement. Are you angry enough to file a lawsuit against your insurance company?

Recently, the outcome of an insurance related lawsuit in California resulted in stipulations that will make it much easier for California consumers to sue their insurance companies. This doesn’t mean that filing a lawsuit against your insurer is the absolute best decision that you could potentially make, however.

There are ways to deal with a dispute that doesn’t involve going to court. It is wise to at least try some other options before going ahead and suing your insurance company. Ideally, this will enable you to get things resolved without having to hire a lawyer, and become involved in a lengthy court battle. If none of these options works, then that may be the time to consider the ramifications of suing your insurance company.

The first thing you can try doing is speaking with your insurance agent. Calmly explain why you are unhappy with whatever it is that your insurance company is doing, (or is failing to do). This opens up a line of communication between you and the insurer. There is the potential that the two of you can negotiate about ways to resolve the issue that would make you happier. You can think of this as the “lets work this out as friends” option.

Your next option would be to speak with that agent’s boss, or with a claims adjuster. Find someone who has a supervisory role, and see what they can do for you.

If this doesn’t work, another option is to file a complaint against your insurance company with your state’s Department of Insurance. This is not likely to actually solve your problem, however. Instead, what this does is makes a paper trail about your complaint.

A copy gets sent to your insurance company, and a copy is kept on record at the Department of Insurance. If it turns out that your insurer has too many of the same types of complaints, then that insurance company might find itself as the subject of an investigation. You can think of this as the “don’t get mad, get even” option.

Suing your insurance company should be a “last option” type of decision. You might have envisioned that this lawsuit was going to quickly solve your problem, that you would win, and that your insurer would have to pay you a large sum of money. This is not how things work in the real world.

Once you file a lawsuit, you can expect that your claim will move much slower than it did before. You won’t be able to use your insurance agent as a resource anymore, because he or she will be loyal to their employer. You could find yourself having to communicate with the insurer’s lawyer, who is there to look out for the insurer’s best interests, (and not yours). It can take six months or more for some lawsuits to be completed.

Image by Clyde Robinson on Flickr