Insurance lawyers specialize in the law that governs the business of insurance. Although companies are regulated by the Department of Insurance in each state, they often try to skirt the rules, deny valid claims and manipulate claimant files to appear that they are in compliance with the law.
Most commonly, insurance lawyers represent people who have had an insurance claim denied or who were subjected to a company’s act of bad faith, as well as insurance fraud.
What Are the Different Types of Insurance?
Companies specialize in many different types of insurance. Although some insurance, like car insurance, is required by law, others are optional. It is important to get familiar with the options to protect yourself from liability, even if the insurance is optional. Below are examples of the different types of insurance.
- What Does My Automobile Insurance Cover?;
- Does My Insurance Always Cover My Car?;
- What if I’m Injured by an Uninsured or Underinsured Driver?;
- Automobile Liability; and
- What is No Fault Auto Insurance?
- What Is Commercial Insurance?;
- Types of Commercial Insurance;
- Why Should I Buy Commercial Insurance?; and
- My Commercial Insurance Company Denied My Business’ Claim. What Should I Do?
- Types of Health Insurance Plans;
- What Happens to My Health Insurance If I Change Jobs?;
- Privacy of Medical Information?; and
- How Do Courts Define Health Care Fraud?
- Types of Life Insurance Policies;
- What is Mortgage Life Insurance?;
- Life Insurance Beneficiaries; and
- Medical and Life Insurance in Divorce.
- What Is Property Insurance?;
- What Is Homeowner’s Insurance?;
- Earthquake Protection Under a Homeowner’s Insurance Policy; and
- My Homeowner’s Insurance Company Denied My Claim. What Should I Do?
Professional liability insurance:
This type of insurance is also known as professional indemnity insurance (PII) or errors & omissions (E&O). It protects professionals whose service involves giving advice from negligence or malpractice actions brought by clients. The most common professionals protected by this insurance are:
- Real estate brokers; and
- Medical professionals.
- What Is an Annuity?;
- Are there Annuity Taxes?; and
- Structured Settlements and Annuities.
What Should I Do if My Insurance Company Denies My Claim or Acts in Bad Faith?
Reasons that an insurance company may deny a claim include, but are not limited to:
- Incorrect patient/claimant identification information;
- Coverage is terminated;
- Services are not covered;
- Member failing to update insurance with other insurance information;
- Timely filing/ statute of limitations;
- Coverage/policy exclusions;
- Pre-existing conditions; and
- Fraud or misrepresentation.
Insurance companies are required by law to deny or approve claims in good faith. However, it is very common that insurance companies will deny the claim in bad faith.
This is a legal term and that will result in a civil claim against the insurance company. Companies have been liable for bad faith for delay in handling claims, lack of investigation, refusal to defend a lawsuit, refusal to make a reasonable offer to settle and the irrational interpretation of the insurance policy.
- What Is Bad Faith?;
- How Can I Tell if My Insurance Company has Acted in Bad Faith?; and
- My Insurance Company has Acted in Bad Faith, What Should I Do?
What Are Some Common Legal Issues That Happen With Insurance Companies?
One of the most common legal issues which arises with an insurance company is when it wrongfully denies an insured individual’s claim under their insurance policy. There are, however, many instances in which the insurer’s denial of a claim is valid under the insurance policy.
For example, with an automobile case that involves car insurance, the insurance company may deny the insured’s claim if it is proven that the insured was responsible for the accident or was grossly negligent.
In the case of home insurance, the insured’s homeowner policy is intended to provide coverage for the insured’s property if it suffers certain damage. An insurance company, however, may deny the homeowner’s claim if the homeowner was the reason that the property suffered damages.
For example, an insurance company may validly deny an individual’s claim if they committed arson or purposefully flood their own property.
There are several legal theories under which an insured individual may sue their insurance company, including:
- Failure to pay on time: Insurance companies have a duty to act in good faith. Therefore, if an insurance company does not make reasonable efforts to timely pay out a properly filed claim, then the insured may be able to make a bad faith claim. Bad faith may also occur when an insurance company offers an unreasonably low amount of money to settle a claim;
- Failure to represent: Another common reason why an insured individual may sue their insurance company is if the company refuses to defend the insured in a lawsuit against them, as provided under the insurance policy. Further, if the insurance company accepts an unreasonably low settlement for the insured’s claim while representing them, the insured may also have a bad faith claim against the company; and
- Breach of contract: The most common legal theory that insurance companies are sued upon is a breach of contract theory. An insured may sue their insurance company if the company fails to follow the terms of the insurance policy.
Can I Sue My Insurance Company?
There are numerous reasons why an individual may seek to sue their own insurance company, and it occurs often. In order to understand why it is possible to sue an insurance company, an individual has to understand the legal relationship between the individual who purchases insurance, or the insured, and their insurance company.
Insurance is essentially a contract, called the insurance policy, in which one party agrees to pay a premium in exchange for the other party, the insurer, to provide coverage for the insured.
In the event that a loss occurs due to an event which was covered by the insurance policy, the insurance company will protect the insured from any:
- Damages; or
Therefore, a legal contractual relationship exists between an insured, the individual who agrees to pay a premium for coverage, and an insurer, the company or group which agrees to protect the insured if a covered event occurs. Lawsuits often arise when insurance companies do not indemnify, or protect, the insured individual from a covered act under the policy or when the insurance company otherwise does not uphold their end of the contract, for example, by wrongfully denying the insurance claim.
What Are Some Remedies Available in an Insurance Claim Lawsuit?
If an individual decides to file a civil lawsuit against their insurance company and they are successful, the court may award damages. As previously noted, the most common legal theory upon which insurance companies are sued is a breach of contract theory.
When an individual succeeds in a breach of contract claim, they are entitled to actual damages, which is what they were supposed to receive under their contract. In some jurisdictions, a plaintiff may recover for out of pocket expenses, including attorneys fees.
In certain cases, punitive damages may be awarded. For example, if the insurance company wrongfully denied their claim and delayed in rendering payment, the insured may be able to recover:
- The value of the property claim;
- The attorney’s fees associated with pursuing the claim; and
- Possible punitive damages.
Should I Contact a Lawyer?
States vary in their state laws regarding insurance and what constitutes bad faith. If you find yourself in a situation where your claim is denied or you suspect the insurance company is acting in bad faith, you should contact an experienced insurance attorney as soon as possible.