Can I Sue My Home Insurance Company? Know Your Rights

Home insurance is a type of contract that protects you from financial losses due to property damage, personal injury, or liability caused by certain events covered by the policy.

However, sometimes your home insurance company may deny your claim, delay your payment, or offer you a low settlement.

In such cases, you may wonder if you can sue your home insurance company for breaching the contract or acting in bad faith.

image of lapsed insurance
What makes Insurance lapse [PHOTO COURTESY OF EXPERIAN]

When Can I Sue My Home Insurance Company?

You can sue your home insurance company if they violate or fail to uphold the terms of the policy.

For example, you may have a valid claim for fire damage, but your insurer may refuse to pay for it, citing an exclusion that does not apply to your situation.

Or, your insurer may take too long to process your claim, causing you additional hardship and stress.

Or, your insurer may offer you a settlement that is much lower than the actual value of your loss.

These are some examples of how your home insurance company may breach the contract or act in bad faith.

Breach of contract means that your insurer did not fulfill their obligations under the policy.

Bad faith means that your insurer acted dishonestly, unreasonably, or maliciously in handling your claim.

How Do I Sue My Home Insurance Company?

Before you sue your home insurance company, you should try to resolve the dispute through other means.

Suing you home insurance company
Suing you home insurance company| MOTIVE

Here are some steps you should take before filing a lawsuit:

Read your policy carefully

Make sure you understand what is covered and what is not, how much is your deductible, how to file a claim, and how to appeal a denial.

Notify your insurer of your claim

You should inform your insurer as soon as possible after a covered event occurs.

You should provide them with all the necessary documents and evidence to support your claim.

Request a written explanation for the denial

If your insurer denies your claim or offers you a low settlement, you should ask them to send you a letter stating the reasons for their decision and the policy provisions they relied on.

Send a demand letter

If you are not satisfied with your insurer’s response, you should send them a demand letter stating why you believe their decision was wrong and how much compensation you are seeking.

You should also give them a deadline to respond to your demand.

File a complaint with the state insurance department

If your insurer still does not cooperate, you can file a complaint with the state agency that regulates insurance companies.

They may investigate your case and try to mediate a resolution.

Hire an attorney

If none of the above steps work, you may need to hire an attorney who specializes in insurance law.

They can help you prepare and file a lawsuit against your home insurance company.

What Can I Recover from Suing My Home Insurance Company?

If you sue your home insurance company and win, you may be able to recover various types of damages, depending on the nature and extent of your loss and the conduct of your insurer. Some of the possible damages are:

Contract damages

These are the damages that you would have received under the policy if your insurer had honored their obligations.

For example, if your policy covers $100,000 for fire damage, but your insurer only offered you $50,000, you can sue for the remaining $50,000.

Consequential damages

These are the damages that result from the breach of contract or bad faith of your insurer.

For example, if you had to pay for alternative housing while waiting for your claim to be processed, or if you lost income due to the damage to your property, you can sue for these expenses.

Punitive damages

These are the damages that are meant to punish and deter your insurer from engaging in bad faith or malicious conduct.

For example, if your insurer intentionally denied or delayed your claim without any reasonable basis, or if they harassed or threatened you during the claim process, you can sue for punitive damages.

The amount and availability of these damages may vary depending on the state laws and the facts of your case.

Conclusion

Suing your home insurance company is not an easy or quick process. It can be costly, time-consuming, and stressful.

Therefore, you should only sue as a last resort after exhausting all other options.

However, if your home insurance company has violated or failed to uphold the terms of the policy or acted in bad faith, you have the right to sue them and seek justice.

 

 

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