Can You Sue If Your Insurance Didn't Pay A Claim?

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As an insurance policyholder, the entire point of paying premiums for years is the belief that when something goes sideways, the policy will pay a claim. Whether this involves a claim you filed on something like water damage to a property or a claim someone filed against you, the goal is to mitigate or eliminate your risk.

Insurance companies don't pay every claim, though. Also, they sometimes pay claims for less than expected. That may leave you wondering if insurance litigation is an option. Learn more about what an insurance litigation attorney may tell you.


One of the first things an insurance litigation lawyer will want to know is whether a client has proven exhaustion. The courts frown upon folks who go directly to judges with complaints, and the law requires plaintiffs to prove that they have exhausted other reasonable means for solving the problem.

Foremost, you need to be able to document that you followed the claims process. Presumably, you have kept all the letters you received about the claim. Likewise, you'll need copies of everything you sent to the insurance company to start the claim and to support it.

You should also have some documentation explaining how the claims process ended. This usually is either a rejection letter or a settlement offer.

If you haven't proven exhaustion, the odds are good the court will dismiss your case if you sue. However, a judge usually dismisses these sorts of cases without prejudice, meaning you'll have the chance to come back when you've exhausted your options and the issue is ripe for insurance litigation.

Reason for the Disagreement

Unsurprisingly, most insurance litigation cases boil down to disagreements over what the terms of the policy are. Some of these can feel very nuanced, such as the difference between storm and flood damage. However, most insurance companies interpret claims with a high degree of specificity. This means, for example, that business continuity insurance frequently doesn't cover something like a government-mandated shutdown due to a pandemic.

The strongest suits for plaintiffs generally focus on bad faith. If an insurance company avoids paying out a claim purely because it is too expensive, for example, that's a bad-faith action that undermines the entire point of people and businesses paying for policies.

Some cases are based on the insurance company's belief that the policyholder wasn't covered at the time. Effective dates are critical for these kinds of cases. Notably, many people acquire gap insurance to make sure, for example, that a policy doesn't end on December 31 with a gap before January 1.

Contact a local insurance litigation attorney to learn more.