Figuring Out If You Should Sue
Suing a car insurance company can sometimes become necessary if the company denies or underpays on a claim or the claimant feels their claim is not being effectively handled. If a car insurance company totally denies and refuses to pay a claim, that usually requires the filing of a lawsuit against the insurance company. The claimant must prove that the company was wrong in its refusal to pay the claim. A good attorney will help with the proof that the insurance company had been wrong. If the insurance company made a partial payment of the claim, suit will be filed for the amount of the claim which remains unpaid . The claimant usually must prove that this amount was owed and not paid. Sometimes an insurance company may delay payment of a claim without good reason. A delay of payment is very simply, the insurance company does not pay a claim in a timely fashion. If a statute of limitations is about to run, an injured party does not have a choice but to file the lawsuit in order to protect its rights in case of a later denial or failure to pay the full claim. A delay does not automatically mean a lawsuit must be filed; it depends on many factors. Sometimes just the filing of a lawsuit makes the insurance company set up its file and put a case adjuster on the claim.
Assessing Your Situation
Once a situation arises with your insurance company, it is essential to evaluate if you have grounds to file a lawsuit. When assessing whether to sue, take time to consider the following. You have a valid case if your insurance company denied coverage after you suffered damages and you have evidence that shows that they should have covered your claim. As an example, if you were involved in an accident that occurred on a vacation, and the accident happened at a rental property, you’ll want to look for any and all evidence necessary to prove your case. Shy of this evidence, you may have a difficult time proving your claim. A policy doesn’t always mean it will be paid out. If you received a denial because the policy does not cover your circumstances, it is best to take up the case with an adjuster from the insurance company that was responsible for your damages. If the damages are covered by the policy but the adjustor still won’t pay out your claim, you can then seek legal counsel because you may have a valid case. Evidence that supports your claim is what insurance companies want from you. If you have all the evidence that proves your claim, then your insurance company may be liable to pay for your damages or at the very least render a policy payout. Be sure you have all the evidence documented, as this will be the key to winning your case. Your best defense in dealing with an insurance company is to understand your policy. This is true when filing a claim and especially so when you intend to sue an insurer. Your policy likely includes fine print that can be unfair at times, so following the basics to understand the coverage goes a long way. From reading the small print down to knowing the claims process, each detail helps to prepare you for working and dealing with your insurance company.
Getting the Case Ready
After years of futile attempts to resolve the claim following a car accident, your attorney pulls the proverbial trigger and prepares a lawsuit. Now, we have to know where to file the case. Jurisdiction is usually pretty straight forward. If you’re hurt in a car accident in Chicago, you file your lawsuit in a Chicago courthouse. The Northern District of Illinois is the federal court that will hear the case if the insurance company resides outside the state of Illinois or the amount in controversy exceeds $75,000. Next you determine which court to file in. In Illinois, we have circuit courts in each county, with Cook County being divided into multiple circuit district courts. Obviously the best place to file for a car accident case is in the county where the crash happened. If two cars collide in Cook County, it makes sense to file in that county. If one car was registered in Lake County, the other in Cook County, the venue is questionable. I’ve seen insurance companies in my past cases argue that they should be in federal court because they are incorporated in Texas. Should venue be contested, the best argument to make are judicial economics, personal jurisdiction (easier than it sounds when you make them come to Illinois), and convenience. The bottom line is that they don’t want the hassle of traveling out of their comfort zone to personally defend a lawsuit by you. Next you determine how to put this complaint together. A complaint in Illinois court will contain a caption with the name of the court, the parties, the case number if one has already been assigned, the title "Amended Complaint", a jurisdiction section where you would state the basis of the court smelling, and state that the accident happened in Illinois and there is a dispute over the amount of $50,000 or more. You’ll then state that you are satisfied by the answering party with a demand for trial by jury. Finally you state what the causes of action are. Causes of action are the legal theories relied upon. In a car accident case, the cause of action is pretty simple. A negligence case, with the following considerations: -Breach of duty by text, speed, impairment (alcohol, drugs, texting, cell phone)? -Causation (would the crash have happened if they didn’t do those things)? -Damages (you were hurt or the car was damaged). Then you go through all of the legal elements of the action and own the defendant at trial.
Finding the Best Attorney
Finding the right lawyer to represent you for a car insurance claim lawsuit may seem like an overwhelming task. But if you’ve been in a serious auto accident or your insurance company has refused to adequately cover your damages, it’s an important and necessary step that shouldn’t be overlooked. Look for an attorney who specializes in insurance disputes – have they done lots of cases like yours? They should be able to give you references from past clients who are happy to recommend them. They should be able to answer all your questions about the process you’re looking at and the likely outcomes. An initial consultation with them is a good way to get a sense of their approach to your situation. This should be free – if an attorney charges you for that, move on to look for someone else! All attorneys should offer that initial free consultation to help you decide whether to work together or not. If they don’t, don’t be discouraged – it could be that they are unable to for ethical or legal reasons. Just be sure to ask before setting up a meeting with them. Be honest with your attorney during the consultation. Let them know if you have any history of substance abuse or other issues that might be relevant in your case. You want the first time they hear of these issues to not be in a courtroom while you’re under cross examination from opposing legal counsel.
how the Case Works
If the car insurance company still hasn’t delivered what you believe is fair or correct after your demand letter, you will have to take them to court by filing a lawsuit against them. Below are the steps on how the process works.
Summons and Complaint
The first thing you’ll do after filing the complaint is to serve it to the defendant, who in this case is your insurance company. The complaint is then filed with the court so the document then becomes a public record. In this document, you basically include the names of all involved parties, describe with as much detail as possible the accident in question, the amount of damages you’re seeking, and why you believe you deserve that amount of money. You’re also describing your theory of liability—which means you’re telling them where the fault belongs and why that party should be held legally responsible. In the summons, you’re telling your insurance company to appear in court and defend themselves. This should be done personally, but it’s ok if you do this by mail.
Response
Your insurance company has 20-30 days to respond to the complaint. If they do respond to your request, there’s a good chance you’ll be able to settle out of court and you won’t have to go through the litigation process. They may agree with your position and pay you what’s owed. If there’s no response from your insurance company, or if there’s a sense the two sides won’t reach an agreement, it’s time to move on to the discovery phase.
Discovery
Discovery is a process where you, the plaintiff, and the defendant exchange information that’s pertinent to the case. This is why it’s so important to take thorough notes at the scene of the accident, get the names of witnesses and their contact information, and take pictures of everything you can think of while the insurance company’s liability is still fresh in mind . During this process, you also have an opportunity to put in writing your requests for certain documents, which your insurance company must provide by law. It’s a good idea to speak with an experienced attorney if you’re not sure what documents to ask for, or if you would like assistance creating the correct questions to ask your insurance company.
Negotiation
The next part of the process is the negotiation period. This may take the shape of a series of back-and-forth conversations, a few mediation sessions, and sometimes even an arbitrated settlement session. Mediation and arbitration are both structured ways of seeking an alternative solution before entering into a formal judicial process. In mediation, you meet with the mediator (often a licensed attorney) at least once so a settlement can be negotiated. The mediator doesn’t have the power to make a judgment in your favor, but they can make helpful suggestions. When you are going the arbitration route, you bring your case to a third party who acts like a judge. The arbitrator hears your arguments and determines who is "right." If you win, the arbitrator must write a report stating that your insurance company should pay you what you’re seeking. After all this, it should be pretty clear whether your case will proceed to trial or not.
Trial
If it comes down to it, there will be a trial. An experienced personal injury attorney will of course be your greatest ally, and may be key to determining the outcome of your trial. They know the system and judges well and they have good relationships with the individuals who will be your primary witnesses. A judge or jury will hear the case in a pre-trial discussion, and based on the evidence they’ve heard will make a call as to whether the insurance company or the injured party is at fault based on what is reasonable.
The Costs and Risks
One of the most important things to know before you file a lawsuit is how much it is going to cost. Lawsuits are expensive and time consuming, and there is always risk in litigation. Lawyers don’t like to sue insurance companies, because juries are usually pro-insurance company. But when the deadline to file a lawsuit against your insurance company is right around the corner, you may only have this option.
So how much does suing an insurance company cost? The answer is, it depends. It depends on the insurance company. Progressive, for example, is known to fight in court, and has a poor reputation. Suing them will cost more than the benefits you are entitled to receive. GEICO, on the other hand, has a great reputation, and is well known to settle cases. Most people walk away from a case with GEICO with more money than they would have received had they settled their claim. State Farm has a fair reputation, but not as good as GEICO. It won’t cost as much to sue State Farm as it would to sue insurers like Progressive or Liberty Mutual, but it will also cost more than suing GEICO. In other words, there’s a sliding scale in suing for PIP benefits.
But how much does it actually cost to sue an insurance company? Typically, it costs anywhere from $500 – $5,000 to file a lawsuit and take it to trial. Most claims against insurance companies could be resolved if everyone just got together and talked. Instead, the parties spend thousands on attorneys and court costs, and then at the end of the day, the claimant won’t be able to collect from the defendant.
That’s right. If you sue your insurance company, and win, good luck collecting. Most of the time, you’ll have to hire a process server and hunt down their registered agent to collect your money. I literally have to send someone to the doorstep of an officer of the company in order to collect a judgment. Now every now and again, the insurance company pays without any hassles, but most of the time is not as simple as it should be.
Let’s talk about the risks involved in suing your insurance company. The first thing you have to understand is, although lawyers typically lose money on insurance company cases, when we do lose, we lose tens of thousands of dollars. That’s no fun. I can tell you from experience that attorneys don’t like getting sued by other attorneys. We consider filing a lawsuit against another attorney similar to stabbing someone in the back. And while I can’t say the feeling is reciprocated (if an attorney sues me, I thank them for it – they probably did a better job than I could). Our clients avoid filing lawsuits for the same reason. That’s the risk of suing the insurer. Not to mention the fact that even if the lawsuit is successful, it can take an incredibly long time to get the benefits to which you’re entitled. And during that time, you could be falling deeper and deeper in debt.
At the end of the day, your best option is filing a lawsuit only if you have to. Always make sure that you’ve negotiated with your insurance company to the best of your ability before you get to the point of suing your insurer. And try to avoid sue at all. It may be your only option, but there are downsides to suing you should know about up front. They’re not fun, and they are inevitable.
Other Options
If you are unhappy with your car insurance company’s response to your claim, but you are still unsure about suing, it may help to know that there are other ways to resolve your dispute with the insurance company. You may wish to pursue a settlement out of court through alternative dispute resolution (ADR) or mediation. ADR is generally a faster way to resolve your dispute, as going to court is time-consuming and requires you to deal with the complexities of the legal system.
ADR allows you to settle without the risk of a jury or judge deciding your case. The process requires both parties to a personal injury claim to submit to negotiation where a settlement can be reached. It is often preferable to resolve your case out of court as the process can be quicker and less expensive than a lawsuit. In addition, with a lawsuit: You may not want to pursue that risk and instead find a middle ground and settle with your insurance company. One way to determine if you are at an impasse with your insurance company is to request a mediation. A neutral third party will examine the facts of your claim and work with you and the insurance company in an attempt to resolve your case without litigation, however, you do not have to accept the recommendation of the mediator.
However, whether you should pursue mediation will depend on the nature of your claim and whether going to court will still provide value for your case. For example, if your property has been damaged in a crash and the damage costs $10,000, you don’t need a mediator to resolve the matter. However, if you sustained a serious injury that will require costly surgery, going to court may be necessary to get the compensation you deserve, while mediation would be of limited value. In some instances, if your insurance company or the at-fault party’s insurance company refuses to settle for a fair amount, you may have to go through the discovery phase before you can go to court. Therefore, if you are thinking of going to court, it may be advisable to first go through the discovery process where you and your attorney can gather all of the evidence to support your case.
Some Winning Cases
The success of suing car insurance companies can often depend on the strength of the plaintiff’s case and the willingness of the insurer to settle. In one case, a plaintiff successfully sued his car insurance provider for refusing an honest claim that he submitted. The case, Smith v. Allstate Property and Casualty Insurance Company, was a result of an accident that occurred on Dec. 27, 2005, when the plaintiff was driving his car to a friend’s house. The plaintiff was struck by a vehicle driven by another party who ran a red light.
The plaintiff filed a claim with his insurer, who delayed payment to the plaintiff citing that it was investigating whether the accident was the plaintiff’s fault. The plaintiff then retained counsel, who during the representations that they received an unfair settlement offer from the insurer. The insurer then refused to provide an explanation for the basis of their offer or support its valuation of the claim. At trial, a jury returned a verdict in the plaintiff’s favor in the amount of $70,000. The insurer appealed but the Court of Appeal found that there was no merit with the insurer’s arguments and upheld the trial court’s award. Smith v. Allstate Property and Casualty Insurance Company (2009) 175 Cal.App.4th 1 .
Similarly, in the case of Kachlon v. Marc Foxx, which arose out of a legal malpractice case against a law firm, the plaintiff successfully sued his insurer for failing to defend him in his bankruptcy proceedings. The plaintiff sought to purchase a business whose former owner, also the defendant’s client, had been taken to court in a trust dispute. The plaintiff wanted to have the dispute settled before he purchased the business and retained the defendant law firm to defend him. The plaintiff paid the first retainer and the defendant law firm almost instantly withdrew from his case. The plaintiff filed a claim with his insurance provider, who agreed to indemnify the defendant law firm; however, the defendant law firm never provided the plaintiff with the benefit of counsel. The plaintiff subsequently prevailed in an arbitration held in Pennsylvania and sought to sue his insurer for not providing him the benefit of the bargain. The Court of Appeals affirmed the judgment in favor of the plaintiff. Kachlon v. Marc Foxx (2012) 200 Cal.App.4th 766.
These cases indicate two important factors that may positively influence the outcome of a suit against an auto insurance company: timely suit and a complete presentation of the claims against the insurer.