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Can You Sue Your Own Insurance Company? Exploring the Rights and Remedies

Posted on: October 31, 2023

PN Editor
October 31, 2023

Can You Sue Your Own Insurance Company? Exploring the Rights and Remedies

1. Circumstances under which you can sue your own insurance company

While insurance companies are meant to provide coverage and support in times of need, there are situations where policyholders may find it necessary to sue their own insurance company. In Houston, Texas, some common circumstances under which individuals can sue their insurance company include:

  • Denial of a valid claim: If your insurance company denies a claim that should have been covered under the terms of your policy, you may have grounds for a lawsuit.
  • Bad faith practices: Insurance companies have a duty to act in good faith and deal fairly with their policyholders. If they engage in deceptive practices, unreasonably delay or deny claims without proper investigation, or fail to communicate important information, you may be able to sue them for acting in bad faith.
  • Breach of contract: If your insurance company fails to fulfill its obligations as outlined in your insurance policy contract, such as not paying the agreed-upon amount for a covered loss or failing to provide the promised coverage, you may have grounds for a breach of contract lawsuit.

Laws specific to Houston, Texas:

In Houston, Texas, the laws governing lawsuits against insurance companies are primarily based on state laws and regulations. The Texas Insurance Code provides guidelines for how insurance companies should handle claims and interact with policyholders. Additionally, court decisions and precedents set by previous cases shape the legal landscape surrounding insurance disputes in Houston.

Statute of Limitations:

In Texas, there is a statute of limitations that sets a time limit within which you must file a lawsuit against your insurance company. Generally, this time limit is two years from the date when the cause of action arises. It’s crucial to consult with an attorney to understand the specific deadlines and requirements for your case.

2. Examples of successful lawsuits against insurance companies

2.1 Medical Malpractice Insurance

In a notable case, a patient filed a lawsuit against their medical malpractice insurance company for denying coverage for a surgical error that resulted in severe complications. The patient argued that the insurance company had acted in bad faith by not fulfilling their contractual obligations. After a lengthy legal battle, the court ruled in favor of the patient and awarded them significant compensation for medical expenses, pain and suffering, and lost wages.

2.2 Homeowners Insurance

An individual sued their homeowners insurance company after their claim for property damage caused by a natural disaster was wrongfully denied. The policyholder argued that the insurance company had failed to properly investigate the claim and provide adequate compensation. The court agreed with the policyholder’s arguments and ordered the insurance company to pay for the necessary repairs and additional damages suffered as a result of the denial.

2.3 Auto Insurance

In an auto insurance lawsuit, a driver sued their insurance company after they were involved in an accident and the insurer refused to cover the cost of repairs to their vehicle. The driver claimed that they had paid premiums regularly and fulfilled all requirements under their policy. The court found that the insurance company had breached its contract with the driver and awarded them compensation for repair costs, rental expenses, and emotional distress caused by the insurer’s actions.

3. How suing your insurance company differs from suing another party involved in an incident

Suing your own insurance company differs from suing another party involved in an incident primarily because it involves contractual disputes rather than personal injury claims or liability issues.


  1. The legal basis: When suing another party involved in an incident, the legal basis is usually negligence or intentional wrongdoing. However, when suing your insurance company, the legal basis is typically breach of contract or bad faith.
  2. Parties involved: In a lawsuit against another party, the defendant is usually an individual or entity directly responsible for the incident. In contrast, when suing your insurance company, the defendant is the insurance company itself.
  3. Compensation sought: Suing another party often seeks compensation for personal injuries, property damage, or other losses resulting from the incident. When suing your insurance company, you are seeking compensation for damages caused by their failure to fulfill their contractual obligations.

It’s important to note that while both types of lawsuits involve legal action, they have distinct differences in terms of legal theories and parties involved.

4. Steps and requirements before filing a lawsuit against your insurance company

4.1 Review Your Insurance Policy

Before considering a lawsuit against your insurance company, it is crucial to thoroughly review your insurance policy. Familiarize yourself with the terms, coverage limits, and any exclusions that may apply to your situation. Understanding your policy will help you determine if the denial or delay in claim settlement is justified or if you have grounds for legal action.

4.2 Document and Preserve Evidence

To strengthen your case, gather all relevant documents and evidence related to your claim. This may include photographs, videos, medical records, correspondence with the insurance company, and any other supporting documentation. It is important to preserve this evidence as it can be crucial during negotiations or in court.

4.3 Exhaust Internal Appeals Process

Most insurance policies have an internal appeals process that allows policyholders to challenge claim denials or unsatisfactory settlements within the company itself. Before filing a lawsuit, it is generally required to exhaust this internal appeals process. Keep records of all communications and outcomes during this process as they may be useful later on.

5. Types of damages claimable when suing your insurance company

When suing your insurance company, there are various types of damages that can be claimed depending on the circumstances of your case:

5.1 Compensatory Damages

Compensatory damages aim to reimburse you for the losses you have suffered due to the actions or negligence of the insurance company. This can include medical expenses, property damage costs, lost wages, and other financial losses directly resulting from their wrongful conduct.

5.2 Punitive Damages

In certain cases where the insurance company’s actions are deemed particularly egregious or malicious, punitive damages may be awarded. These damages are meant to punish the insurer and deter similar behavior in the future.

5.3 Emotional Distress Damages

If you have experienced significant emotional distress as a result of the insurance company’s wrongful conduct, you may be eligible to claim damages for emotional distress. This can include anxiety, depression, or other mental health issues caused by their actions.

6. Frequency of individuals suing their own insurance companies

The frequency of individuals suing their own insurance companies varies depending on several factors such as the nature of the insurance industry and individual circumstances. While it is difficult to provide an exact statistic, lawsuits against insurance companies are not uncommon.

6.1 High-Profile Cases

High-profile cases involving large insurance companies often receive media attention, creating public awareness about the possibility of suing one’s own insurer. These cases can inspire others who feel mistreated by their insurance company to pursue legal action.

6.2 Complex Claims

Individuals may also choose to sue their insurance company when faced with complex claims that have been wrongfully denied or undervalued. Such cases often involve significant financial losses or personal hardships, motivating policyholders to seek legal recourse.

7. Risks and consequences associated with suing your own insurance company

Suing your own insurance company can come with certain risks and consequences that should be considered before taking legal action:

7.1 Financial Costs

Legal proceedings can be expensive, especially if the case goes to trial. Hiring an attorney, court fees, expert witnesses, and other related expenses can quickly accumulate. It is important to assess whether potential financial recovery outweighs these costs.

7.2 Strained Relationship with Insurer

Suing your insurance company may strain your relationship with them, potentially affecting future coverage or claims. It is essential to weigh the potential consequences against the desired outcome and determine if legal action is the best course of action.

7.3 Time and Emotional Investment

Lawsuits can be time-consuming and emotionally draining. The process may involve lengthy negotiations, court appearances, and waiting for a resolution. Consider whether you are prepared for the time commitment and emotional toll that comes with pursuing legal action.

8. Typical duration of legal action against an insurance company

The duration of legal action against an insurance company can vary significantly depending on various factors:

8.1 Complexity of the Case

The complexity of your case plays a significant role in determining how long it will take to reach a resolution. Complicated cases involving multiple parties, extensive evidence, or complex legal issues may take longer to litigate.

8.2 Court Backlog

The backlog of cases in the court system can also impact the duration of legal action against an insurance company. If courts are overwhelmed with cases, it may result in delays in scheduling hearings or obtaining a trial date.

8.3 Settlement Negotiations

Many lawsuits against insurance companies are resolved through settlement negotiations rather than going to trial. The length of these negotiations depends on factors such as the willingness of both parties to reach a settlement and the complexity of reaching mutually agreeable terms.

9. Alternative dispute resolution methods for issues with insurance companies

In addition to traditional litigation, there are alternative dispute resolution (ADR) methods available for resolving issues with insurance companies:

9.1 Mediation

Mediation involves a neutral third party who assists both parties in reaching a mutually acceptable resolution. The mediator facilitates communication and negotiation but does not make binding decisions.

Benefits of Mediation:

– Allows for more control over the outcome compared to litigation.
– Generally quicker and less expensive than going to trial.
– Can help preserve relationships between the policyholder and insurance company.

9.2 Arbitration

Arbitration is a process where an impartial arbitrator or panel reviews the case and makes a binding decision. It is similar to a simplified version of a trial, but with fewer formalities.

Benefits of Arbitration:

– Typically faster than litigation due to streamlined procedures.
– Can be less costly than going to court.
– Provides a final decision that both parties are bound by.

10. Tips and advice for considering a lawsuit against your insurance company

Before deciding to sue your insurance company, consider the following tips and advice:

10.1 Consult with an Attorney

Seeking legal advice from an experienced attorney specializing in insurance law is crucial. They can evaluate your case, provide guidance on potential outcomes, and help navigate the complex legal process.

10.2 Document Everything

Maintain detailed records of all interactions with your insurance company, including phone calls, emails, letters, and claim-related documents. This documentation will serve as evidence if you decide to pursue legal action.

10.3 Understand Your Policy

Thoroughly review your insurance policy to understand its terms, coverage limits, exclusions, and dispute resolution procedures. Knowing your rights and obligations under the policy will help you make informed decisions throughout the process.

10.4 Consider Alternative Dispute Resolution

Explore alternative dispute resolution methods such as mediation or arbitration before resorting to litigation. These methods can often provide faster and less adversarial resolutions while avoiding the costs associated with going to court.

10.5 Evaluate the Costs and Benefits

Carefully assess the potential financial costs, time commitment, and emotional toll of pursuing legal action against your insurance company. Consider whether the potential outcome justifies the risks and consequences involved in a lawsuit.

In summary, it is possible to sue your own insurance company under certain circumstances. However, the decision to pursue legal action should be carefully evaluated and guided by the specific terms and conditions of your insurance policy and the nature of the dispute.

Can you sue an insurance company UK?

Both you and the insurance company are expected to act reasonably according to the law. If the insurer does not provide full coverage for your claim, you may need to take legal action against them. However, the first step is to write a complaint letter. Some insurers may be willing to explore mediation after receiving the complaint.

How do I claim my excess back?

If your insurance company has handled the claim, they should reimburse the excess amount for you. In the case of a no-fault accident, a credit hire company can also file a claim on your behalf.

Can you sue your own insurance company in Georgia?

In Georgia, individuals who have been denied their insurance claims can take legal action against their insurance company if the denial was done in bad faith or in violation of the contract. Although the same behavior can be used to support both claims of bad faith and breach of contract, they are separate legal claims.

What not to tell your insurance company?

Please refrain from discussing any additional details about the accident, such as how it occurred or the extent of your injuries. Additionally, do not provide a written or recorded statement about the accident without first consulting your personal injury attorney.

What if repair cost is less than excess?

If the damage to your car is minimal and the repair cost is lower than your excess, there is no need to file a claim. However, you can still have a claims adjuster evaluate the damage to get an accurate estimate of the bill without any requirement to submit a claim.

Is insurance excess refundable?

If your insurance company has handled the claim, they can usually reimburse you for the excess amount. However, it is recommended to confirm this with them while going through the claims process.

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