Suing Your Insurance Company for Denying Homeowners Claim

Suing an insurance company for denying a homeowner claim is sometimes the only way to get paid what you are owed. However, suing is a complex and often expensive legal process, so it should only be done when simpler options that could produce a similarly positive result have been exhausted.

How to Fight a Denied Homeowners Insurance Claim

Denial of a homeowners insurance claim is incredibly frustrating. You have homeowners insurance and have faithfully paid your premiums to ensure you are covered in the event of property damage, liability claims, personal property loss, and related expenses. If your insurer is now denying that coverage, it can be challenging. 

Suing an insurance company over denying a homeowners claim is generally a last resort. But if an appeal is denied, it may be the only path forward. 

If you intend to fight a denied claim, especially in court, remember to completely read through your insurance policy and make sure you have a solid case. Follow these steps to move forward:

1. Try Again to Resolve the Dispute

Whenever possible, avoiding a legal battle is preferable if you can get your claim paid through other means. If your claim was denied, do not begin taking legal action without first going through the appeal process with your insurer. If you can appeal a denied claim successfully, you will save time and money.

Sometimes, you can simply improve an existing claim and resubmit it. This process will look different depending on the specific circumstances that led to the claim being denied. You may need to be more thorough than you were initially, gathering evidence such as photos or professional opinions that counter the reasons your claim was initially rejected. 

You may also want to consider hiring an independent appraiser to review the damage done to your home and give you a professional opinion about whether your plan should cover that damage. This is especially necessary if the insurance adjuster your insurer sent to evaluate the damage has given an assessment you believe is wrong or was given in bad faith. 

This first step is very important. It demonstrates that you again attempted to resolve the matter independently and in good faith before taking it to court. 

2. Maintain a Documentation Trail

To strengthen your case if you eventually take legal action against your insurer, keep a documentation trail. You should have thorough documentation regarding any correspondence between you and your insurer, whether the contact was through physical mail, email, phone, or any other method of communication. 

Do not delete any emails you receive or destroy any physical mail. These serve as evidence of the communication. 

If you speak via phone, note the time, date, name of the representative, and any details about the conversation. If legal in your area, you may also benefit from recording all phone conversations you have with your insurer. 

Importantly, your insurer is likely also doing this. Insurance companies generally keep thorough documentation trails of their interactions with customers. 

3. Keep a Record of All Losses & Expenses

Any losses incurred as a result of the damage done to your home should be recorded. You should have an inventory listing all insured items, pictures of damage relevant to the claim from multiple angles, and anything else that might help you track and prove losses. Expenses should similarly be tracked, such as the cost of repairing damage or replacing insured items. 

While it isn’t guaranteed that all losses and expenses related to your case will be paid out, tracking them is necessary. Depending on the specifics of your situation, medical bills, lost wages, attorneys fees, and more might be paid out if you successfully sue, even if your insurance wouldn’t normally have paid out those costs.

4. Appeal the Denial

Before suing, first appeal any denial of your claim. This process generally involves writing out a letter of appeal with supporting evidence and documentation, addressing the reasons your claim was denied. 

As you go through the appeal process, remain persistent and professional. Be precise with your language. Do not accept fault or concede that an insurance company’s denial of your claim may have been valid. Doing so may make successfully suing at a later date difficult or simply impossible.

5. Hire an Attorney & File a Complaint

Insurance law is complex. If other avenues to receive payment for damages you believe your insurance should cover have failed, you will likely need to hire an attorney if you intend to sue. 

An attorney can also give you a professional assessment of the validity of your case. It’s important to understand the chances of successfully suing a company before beginning the often expensive and time-consuming process of pursuing legal action.

When to File a Lawsuit Over a Denied Homeowners Claim

Filing a lawsuit over a denied homeowners claim is generally best thought of as a final option to get a claim paid. You should first make sure a cheaper, faster option to get your claim paid, such as appealing, isn’t available to you. 

Confirm you have a valid case against your insurer. Many claims are denied for valid reasons.

Some common reasons you might pursue legal action against an insurer include repeated claim denials, bad faith practices conducted by your insurance company, or significant financial losses resulting from a claim being denied. 

Advantages & Disadvantages of Suing

The biggest benefit of taking legal action against an insurance company is that they have much less control over the situation. 

With the claim submission process, they have the option of denying your claim. You can appeal, but the goal of that appeal is essentially to convince your insurer that the claim is valid. If they continue to deny the validity of your claim, especially if they willfully deny a claim that they know to be valid, legal action can force them to pay regardless. 

However, filing a lawsuit does come with significant downsides. You may need to pay a legal professional a significant amount of money throughout your lawsuit. It may also be months or more before your claim is paid, assuming you are successful. 

This also highlights another major downside — time and money can be spent on a lawsuit that is ultimately unsuccessful. If you pursue legal action and the court sides with the insurance company, you may be worse off than when you first began.

Many insurance attorneys work on contingency, meaning that they take a percentage of the final settlement. At least with this setup, you won’t be paying out of pocket for lawyer fees if you lose.

Common Reasons a Homeowners Claim Is Denied

There are many reasons a homeowners claim might be denied, including these:

• Lack of coverage
• Policy exclusions
• Insufficient documentation
• Policyholder negligence

To maximize your chances of successfully submitting a claim, make sure you fully understand your policy and that the policy you select has all the coverage you want. When the time comes to submit a claim, be thorough in your documentation and timely in submitting your claim. 

Hiring an Insurance Lawyer for a Homeowners Claim

Hiring the right insurance lawyer for a homeowners claim is important. An insurance lawyer will help you negotiate the legal complexities of suing a company, which involves many steps, such as these:

• Evaluating the validity of your case
• Filing a lawsuit if appropriate
• Engaging in pre-trial negotiations (and potentially settling)
• Going to trial

It’s also important to highlight that finding a good insurance lawyer doesn’t guarantee a successful lawsuit. Even a skilled lawyer can’t successfully sue a company if their client doesn’t have a strong case. If your claim was denied for valid reasons, there may not be anything a lawyer can do to help you.

Where lawyers can be helpful are in situations where companies act in “bad faith,” meaning they intentionally act in their own self-interest in such a way that they impede a claim from being paid out, even if they know it to be legitimate. Look for an attorney who is experienced in insurance law, particularly in fighting denial of claims similar to yours.

Frequently Asked Questions About Suing Your Homeowners Insurance Company

Homeowners insurance is a complex subject. We’ve compiled some of the most frequently asked questions about suing for a denied homeowners insurance claim.