What Policyholders Should Know About Suing Insurance Companies

 

This isn’t a sexy topic; it’s an important one.

Insurance disputes matter. Most insurance disputes involve major damage to property totaling thousands, tens of thousands, or hundreds of thousand of dollars. If you’ve made an insurance claim, then you’ve likely suffered a tremendous loss. And if you’re on the losing side of an insurance dispute, then your loss can be devastating.

Insurance companies sometimes treat policyholders unfairly when there’s an insurance dispute. In that scenario, litigation is usually the only way a policyholder can hope for fair treatment. Litigation may be the only way to recover against your devastating loss.

If you want to litigate against an insurance company because of an insurance dispute, understand what causes of action you could bring against an insurance company.

Statutory Causes of Action

Statutory causes of actions are those set forth in California statutes.

The California Earthquake Insurance Act found in Insurance Code sections 10081 to 10089.4 requires every residential property insurance policy to offer coverage for earthquake damage. If your policy did not, arguably you have grounds to sue your insurance company.

Also consider the Unfair Competition Law (“UCL”) found in Business and Professions Code sections 17200 to 17210. It provides equitable relief (i.e. non-monetary) for unlawful, unfair, or fraudulent business practices. For example, perhaps your insurance company failed to disclose material changes to your policy.

The related Consumer Legal Remedies Act (“CLRA”) set forth in Civil Code sections 1750 to 1784 prohibits unfair and deceptive practices in consumer transactions for services or goods. Some courts, however, may not consider insurance a “service” or “good,” so your reliance on CLRA may be misplaced.

Located in Civil Code section 51, the Unruh Civil Rights Act prohibits discrimination by a business on grounds like race, disability, or national origin. The Americans with Disabilities Act, or ADA, is a federal law found in 42 USC section 12101-12213. It prohibits discrimination against people with disabilities. It is unlikely that your insurance company violated either statue as it relates to your insurance dispute. But it’s important to be aware that insurance companies are subject to these laws.

You’re more likely to succeed with a common law cause of action.

Common Law Causes of Action

Common law causes of action are those developed and recognized by California courts.

The most applicable common law cause of action would be breach of contract. An insurance policy is a contract, so you need to show the insurance company breach the terms of the policy.

Closely related to that is the cause of action for bad faith. You should show that the insurance company breached the contract, and did so in bad faith. Facts must show (1) that the insurance company refused, without proper case, to compensate you for a loss; or (2) the insurance company unreasonably delayed in paying you benefits due under the policy.

An action for declaratory relief is an attempt to have the court determine the rights and obligations of the insurance policy. A textbook example is whether an insurance policy provides coverage to a loss.

Conclusion

These causes of action allow you to sue an insurance company over an insurance dispute. Not every one is applicable, but at least one is if you intend to litigate against an insurance company. Unless you have the expertise to do so, consult with an attorney who has experience in insurance disputes. Otherwise, it will be you against the insurance company and its horde of lawyers.

Evan W. Walker

Evan Walker is the founder of The Law Office of Evan W. Walker in La Jolla, CA, where he practices personal injury claims and insurance disputes. Before opening his practice in 2015, he practiced in-house with Travelers’ Insurance. Evan received his J.D. from Loyola University New Orleans College of Law in 2008. Follow him on Twitter @evanwwalker and on LinkedIn.

Evan W. Walker

Evan Walker is the founder of The Law Office of Evan W. Walker in La Jolla, CA, where he practices personal injury claims and insurance disputes. Before opening his practice in 2015, he practiced in-house with Travelers’ Insurance. Evan received his J.D. from Loyola University New Orleans College of Law in 2008. Follow him on Twitter @evanwwalker and on LinkedIn.

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