When your insurance company denies or delays your claim, you feel like you’re abandoned at the worst possible time. In New York, policyholders have the right to hold insurance companies accountable when claims are wrongfully denied or mishandled. However, understanding the process of suing an insurance company and the insurance law can be tricky.
In this post, we’ll go over the steps to take before you file a lawsuit, the legal grounds to sue an insurance company in New York, and the types of damages you can recover with the help of an experienced insurance coverage lawyer.
Reasons Insurance Claims Get Denied
Claims get denied for many reasons, mostly related to policy language, documentation or insurer practices. Here are the most common and what they mean. In some cases, an insurance company acts in bad faith by denying valid claims without proper justification.
No Coverage
Insurers deny claims because of no coverage in the policy. Policies have exclusions or limits of coverage and if the claim doesn’t fit within those terms the claim gets denied. Sometimes the policy language is tricky misunderstandings happen and claims get denied that should not be excluded. Sometimes, misunderstandings arise due to miscommunication with the insurance agent, leading to wrongful claim denials.
Fraud or Misrepresentation
If an insurer thinks there was fraud or intentional misrepresentation they will deny the claim. This can include exaggerations of the damages or inaccuracies in the reported details even if unintentional. Insurers will flag any discrepancy as a risk especially if big money is involved.
Procedural or Documentation Errors
Procedural errors or missing documentation are also common reasons for denial. Insurers require thorough documentation like medical records, receipts, and timely submissions. A minor procedural mistake or missed deadline can result in a denied claim and policyholders are responsible for making sure all necessary documentation is complete and accurate.
Legal Reasons to Sue an Insurance Company in New York
Policyholders in New York have several legal grounds to sue an insurance company if claims are wrongfully denied, or mishandled, or if the insurance company breached the contract. Here are the reasons that apply.
Breach of Contract
An insurance policy is a contract between the insurer and the policyholder. When an insurer denies a claim that’s covered under the policy they may be in breach of contract. This type of breach occurs when the insurer doesn’t live up to their obligations as stated in the policy and the policyholder has the right to sue to enforce the contract. Policyholders have the right to sue if the insurer fails to address valid claims covered under the policy.
Bad Faith Insurance Practices
New York law allows policyholders to sue for bad faith if the insurer acts unfairly or dishonestly when handling a claim. Bad faith includes unreasonably denying claims, delaying without justification or failing to investigate claims. To sue for bad faith you must show the insurer didn’t live up to their obligations under the implied duty of good faith and fair dealing. When an insurance company fails to meet its obligations, policyholders can seek legal recourse for bad faith practices.
Unreasonable Delay in Claims Processing
Insurers must process claims promptly and fairly. Excessive delay in processing or paying a claim can cause further financial harm to policyholders and may be a basis for a lawsuit. When the delay is intentional or without reason it may be a breach of the insurer’s duty to act in good faith and you have a legal remedy.
Damages to Claim in a Lawsuit
In a lawsuit against an insurance company, claimants can claim various types of damages for the losses they suffered. Here are the main categories of damages that apply. This includes claims related to property damage, medical expenses, and lost wages.
Compensatory Damages
Compensatory damages are the direct financial losses the insurance company should have paid in the first place. This includes medical expenses, repair or replacement of property, and lost wages. These damages are meant to make the claimant whole by covering the expenses the insurance company denied. For instance, if you were involved in a car accident, compensatory damages would cover the repair or replacement of your vehicle.
Consequential Damages
Consequential damages are the secondary costs resulting from the denied claim. For example, if the denial caused missed work, out-of-pocket expenses, or additional medical treatment these costs may be included in the lawsuit. Consequential damages address the broader financial impact of the insurer’s actions.
Punitive Damages
In cases of egregious conduct or clear bad faith, the court may award punitive damages. These damages are not related to the claimant’s losses but are meant to punish the insurance company for their wrongdoing. Punitive damages are rare but may apply if there’s strong evidence of intentional or reckless disregard for the policyholder’s rights.
Before Suing an Insurance Company
Before you sue an insurance provider, there are steps policyholders should take to strengthen their case and potentially resolve the issue without a lawsuit.
Review Your Policy
Review your policy thoroughly. Understanding the coverage, exclusions, and terms will help you determine if the insurer’s denial is valid or a breach. Knowing the policy terms will also support your claim if you do decide to sue. Understanding the insurance industry regulations can also help you identify if the insurer’s denial is justified.
Sometimes contacting the insurer directly will resolve the issue or misunderstanding. Calmly and clearly present your evidence and they may reevaluate your claim. This may result in a favorable outcome without a lawsuit.
Document All Communications and Gather Evidence
Keep a record of all communications with the insurance company. Save emails, letters, and notes from phone calls as these will be evidence if the case goes to court. Gather all relevant documents such as medical records and receipts as well.
When You Need an Attorney
In some cases, an insurance attorney can make all the difference in resolving an insurance dispute. Here are the situations where an attorney is often recommended.
High Value or Complex Claims
When claims involve big money or complex details such as serious injury or long-term damages legal representation is key. An attorney can navigate the complexities of the claim, and ensure all aspects are documented and valued to get you the most compensation. Many attorneys work on a contingency basis, meaning you won’t incur any attorney’s fees unless you recover your losses.
Disputed Liability or Insufficient Evidence
If there’s a dispute over fault or you lack evidence a lawyer can help. Lawyers know how to get critical evidence, interview witnesses, and present a strong case. This is useful when the insurer argues against liability or downplays the damages.
Negotiating Settlements
Insurers will offer lower settlements when claimants are unrepresented. A lawyer can counter these offers with strong negotiating skills and evidence and increase the chances of a fair settlement. If negotiation fails a lawyer can also prepare the case for court if needed.
Contact an Experienced Westchester Insurance Coverage Attorney Today!
If you believe your insurance claim was wrongfully denied or mishandled, don’t face the process alone. Our team at Rosenbaum & Taylor, P.C. has the expertise to help you navigate your legal options and pursue the compensation you deserve.
Contact us today at [phone] for a free claim review!