Can You Sue an Insurance Company?

Situations Where You Can Sue

Insurance policies are legal contracts. When you pay your premiums, you are fulfilling your end of the agreement. If a covered event occurs, the insurer has a legal duty to honor the policy. You generally have the right to file a lawsuit against an insurance company when they fail to uphold this duty. The most common situations include:

Denied Claims

If your claim was completely denied without a valid, legally sound reason, you may have grounds to sue. Insurance companies must investigate thoroughly and point to specific exclusionary language in the policy to justify a denial. A wrongful denial is a direct breach of contract.

Delayed Claims

Statutes in Florida require insurance companies to acknowledge, investigate, and pay claims within specific timeframes. If an insurer employs stall tactics—such as endlessly requesting unnecessary documentation or failing to respond to communication—you can take legal action to compel them to pay.

Underpaid Claims

Sometimes an insurer will accept liability but offer a payout that is drastically lower than the actual damages sustained. If their initial offer or subsequent "final" offers are unreasonable compared to independent repair estimates, medical bills, or property valuation, a lawsuit may be necessary to recover the difference.

Bad Faith

If the insurance company acted egregiously—such as lying about policy terms, ignoring submitted evidence, or intentionally stalling—they may be guilty of "bad faith." A bad faith lawsuit goes beyond just recovering your original claim amount and can penalize the insurer for their conduct.

Common Reasons Insurance Companies Get Sued

Lawsuits against insurers generally fall into distinct legal categories based on the nature of the dispute:

• Breach of Contract: The insurer simply failed to pay what they promised to pay under the explicit terms of the policy.
• Bad Faith Conduct: The insurer breached their implied duty of good faith and fair dealing. This involves deceptive or unfair tactics to avoid paying a legitimate claim.
• Misrepresentation: The insurance agent or company sold you a policy under false pretenses, lying about what would be covered.

Legal Grounds for Suing Insurance

When your attorney files a lawsuit, they must outline the specific legal grounds. These typically involve:

Contract Law

The foundation of almost every insurance lawsuit. Because the policy is a binding contract, contract law governs disputes. If you sustained property damage, your property claim lawyer will argue that the insurer's failure to compensate you is a direct contractual breach.

Tort Law

Bad faith claims often fall under tort law. While contract law deals with the agreement itself, tort law addresses the wrongful actions of the insurer that caused you additional financial or emotional harm. In Florida, you can pursue both first-party (suing your own insurer) and third-party (suing an at-fault driver's insurer) bad faith claims under specific statutory frameworks.

How an Insurance Lawsuit Works

Filing the Claim & The Dispute

Before a lawsuit occurs, there is an administrative phase. You file your claim, provide evidence, and await a decision. The dispute arises when the insurer issues a denial or a lowball offer. Internal appeals may be attempted, but if the insurer refuses to budge, litigation becomes the next logical step.

The Lawsuit Process

Filing a lawsuit initiates formal legal proceedings. A civil complaint is filed in the appropriate jurisdiction (such as Duval County for Jacksonville residents), outlining your grievances and the damages sought. The insurance company must formally answer the complaint, after which the discovery phase begins.

Settlement vs Trial

The vast majority of insurance lawsuits never see the inside of a courtroom. During discovery and mediation, the pressure of a looming trial often forces insurers to offer a fair settlement. However, if they refuse to settle for an adequate amount, your attorney will take the case to trial before a judge or jury.

Step-by-Step Process to Sue an Insurance Company

1. Review Policy: Understand exactly what your coverage limits and exclusions are.
2. Gather Evidence: Compile all correspondence, repair estimates, medical bills, and photographs.
3. Hire a Lawyer: Engage a bad faith insurance lawyer to evaluate your case objectively.
4. Send a Demand Letter: Your attorney will draft a formal demand letter outlining your case and offering the insurer one last chance to settle before litigation.
5. File the Complaint: If the demand is rejected, the formal lawsuit is filed in court.
6. Discovery: Both sides exchange documents, take depositions under oath, and build their arguments.
7. Mediation: A neutral third party attempts to help both sides reach a settlement.
8. Settlement or Trial: The case resolves either through a negotiated check or a trial verdict.

Cost of Suing an Insurance Company

Lawyer Fees (Contingency Basis)

Most policyholders are rightfully concerned about upfront costs. Fortunately, the majority of personal injury and insurance dispute attorneys operate on a contingency fee basis. This means you pay $0 upfront. The attorney only collects a fee (usually a percentage of the final payout) if they successfully win or settle your case.

Filing Costs & Statutory Fee Shifting

Florida law has historically contained provisions (though subject to recent legislative changes) designed to protect policyholders. In many successful breach of contract suits against insurers, the court may order the insurance company to pay your attorney's fees and court filing costs, meaning your entire settlement goes into your pocket.

How Long Lawsuits Take

Timelines vary drastically based on the complexity of the claim and the stubbornness of the insurer.

What Delays Cases

Cases involving severe injuries with ongoing medical treatment take longer because it is impossible to calculate total damages until you reach Maximum Medical Improvement (MMI). Additionally, aggressive defense tactics from the insurer—such as filing frivolous motions or refusing to produce documents during discovery—can extend the timeline from months to over a year.

Risks of Suing Insurance

While suing can be highly effective, it is not without risks:

• Time Investment: Lawsuits require patience and participation in depositions.
• Losing the Case: If a jury decides against you, you receive no compensation.
• Costs: While contingency fees protect you from attorney bills, losing a case may sometimes leave you liable for the defendant's court costs depending on specific state statutes and settlement offers made prior to trial.

Florida Insurance Laws

Bad Faith Rules in FL

Under Florida Statute 624.155, you must file a Civil Remedy Notice (CRN) with the Department of Financial Services before filing a bad faith lawsuit. This gives the insurance company 60 days to "cure" the bad faith by paying the claim. If they fail to do so, the lawsuit can proceed.

Filing Deadlines

The statute of limitations to sue for a breach of property insurance contract in Florida is generally 5 years from the date of the breach. For personal injury negligence claims (third-party), recent legislative changes have reduced the timeline, making swift action critical.

When You Should Hire a Lawyer

When You Need One

You should hire an attorney immediately if your claim is denied, the insurer accuses you of fraud, your damages are substantial (exceeding $10,000), or you are pursuing a bad faith action. You can also read more of our guides for further insights.

When You Might Not Need One

If the dispute involves very minor property damage (e.g., a $1,500 fender bender) and liability is clear, you may be able to handle negotiations yourself or utilize small claims court without an attorney.

Frequently Asked Questions