If your insurer underpays your insurance claim, you may feel frustrated and uncertain about your options. Fortunately, you have legal rights and may be able to challenge the decision through negotiation, formal disputes, or even a lawsuit.
Why Do Insurers Underpay Claims?
Insurance companies may underpay claims for several reasons, including:
- Policy Interpretation: Insurers may argue that certain damages are not fully covered under your policy.
- Lowball Settlement Offers: Some insurers offer less than what’s needed for repairs, hoping policyholders will accept the lower payout.
- Claim Adjuster Errors: Mistakes in assessing damages or calculating repair costs can lead to underpayment.
- Delays and Bad Faith Tactics: Some companies may intentionally stall or reduce payments to avoid full payouts.
Steps to Take Before Suing Your Insurer
Before resorting to a lawsuit, consider these steps:
- Review Your Policy: Carefully read your policy’s terms to ensure your claim was fairly assessed.
- Request a Detailed Explanation: Ask your insurer for a written breakdown of how they calculated your claim payout.
- Get a Second Opinion: Hire an independent contractor or public adjuster to evaluate the damage and estimate repair costs.
- File an Appeal: Most insurance companies have an internal dispute resolution process. Submitting additional evidence can sometimes lead to a higher payout.
When Can You Sue Your Insurer?
If negotiations fail, you may have grounds for a lawsuit in cases of:
- Bad Faith Insurance Practices: If your insurer deliberately undervalued or denied your claim without proper justification.
- Breach of Contract: If your insurer fails to honor the terms outlined in your policy.
- Deceptive Practices: If the insurer misrepresented policy terms or engaged in unfair settlement tactics.
How to Sue for an Underpaid Insurance Claim
- Consult an Insurance Lawyer: An attorney experienced in insurance disputes can assess your case and advise on the best course of action.
- Complaint with State Regulators: Many states have insurance departments looking at unethical claim policies.
- Pursue Legal Action: Should everything else fail, suing the insurer could compel payment of the entire owing sum.
Conclusion
Before suing, try negotiating, gathering evidence, and filing an appeal. If these steps fail, legal action may be necessary to recover the compensation you deserve.