Should You Sue Your Auto Insurance? Drop Risk Factors

It is rare for an insurance company to drop a client after they file a claim or lawsuit against them. However, they can cancel or choose not to renew your coverage, but they must provide notice. There are two ways insurance companies can end a customer's policy: through non-renewal or cancellation. Non-renewal means the insurance company will fulfil the rest of your policy term but let you go as a customer after that. With cancellation, the insurance company may be required to give advanced notice in writing, but they can cancel the policy effective on a specific date prior to the expiration of the policy term in certain situations.

Reasons for suing your auto insurance company

It is rare for an insurance company to drop a client after a claim, but it can happen. Providers can cancel or opt not to renew coverage, but they must provide notice. Here are some reasons why you might consider suing your auto insurance company:

• Denial of a legitimate claim: If your insurance company denies a legitimate claim for payment for damage to your car or personal injury suffered in an accident, you may have grounds to sue. This is especially true if you had the correct coverage and filed your claim correctly.
• Delayed payment: If your insurance company takes an unreasonable amount of time to pay your claim, you may be able to sue, especially if there are specific state laws providing time frames for resolving claims.
• Inadequate payout: If the payout you receive is less than the agreed-upon amount, you may want to consider legal action.
• Lack of explanation for denial: If your insurance company denies your claim without providing a valid reason, you may have grounds to sue, especially if you had the correct coverage and filed your claim accurately.
• Fraud: If your insurance company commits fraud, such as misrepresenting car values or using fraudulent insurance documents, you may be able to sue.
• Disputes about insurance rates and fees: If your insurance company wants you to pay more for coverage than you think is required, this could be a reason to sue.
• Non-payment of premiums: If you don't pay your premiums on time, your insurance company may cancel your coverage. However, if you believe you have paid your premiums when they are due and your insurance company still cancels your coverage, you may have grounds to sue.
• Cancellation or non-renewal of a policy: Car insurance policies may be cancelled or not renewed for various reasons, often outlined in state laws. If you feel that your policy has been unfairly cancelled or not renewed, you may be able to sue.

Remember that suing your insurance company can be a lengthy and costly process, so it is essential to consult with an attorney to determine if it is worth pursuing legal action.

Can your auto insurance company drop you?

Yes, your auto insurance company can drop you, but it's not common for them to do so after just one claim. Auto insurance companies can legally cancel policies or choose not to renew them at the end of a policy term if the customer becomes riskier to insure than when they first bought their policy.

There are two ways insurance companies can end a customer's policy: through non-renewal or cancellation. In the case of non-renewal, the insurance company will see out the rest of your policy term but let you go as a customer after that. With cancellation, the insurance company may be required to give advanced notice in writing, but they can cancel the policy effective on a specific date before the expiration of the policy term in certain situations.

Common reasons for auto insurance non-renewals vary by state and insurer and include multiple accidents and too many insurance claims. Insurers generally pay more attention to accidents where the customer is at fault. However, being involved in too many collisions, even those where the customer wasn't at fault, can be a red flag to insurers.

Some reasons for immediate cancellation include:

• Being convicted of a DUI offense
• Loss of driving privileges
• Late payments or failure to pay insurance premiums
• Insurance fraud

If your auto insurance company drops you, you'll need to start shopping around for a new policy as soon as possible. It's illegal to drive without insurance in almost every state, and having a lapse in car insurance coverage between policies may mean more difficulty in getting a new policy and higher rates when you do.

What to do if your auto insurance company drops you

While it's rare for an auto insurance company to drop you after a claim, it can happen. Providers can cancel or opt not to renew your coverage but they must provide notice. If your auto insurance company drops you, here's what you can do:

• Start shopping around for a new policy as soon as you learn your old one isn't being renewed or has been canceled. It's illegal to drive without insurance in most places.
• Be prepared to pay a higher rate with your new provider. Having a lapse in car insurance coverage between policies may mean more difficulty in getting a new policy and higher rates when you do.
• Many of the major insurance companies will accept customers whose previous insurer didn't renew their policy.
• If you've been dropped due to a DUI, you may still be able to get insurance from certain providers if you hold a valid license and are legally able to drive.

Remember, insurance companies can legally drop a customer if they become riskier to insure than when they first bought their policy. This can include having multiple accidents within a three-year window, filing too many claims, loss of driving privileges, insurance fraud, or late payments/failure to pay insurance premiums. To avoid being dropped, practice safe driving habits and pay your premiums on time and in full.

Alternatives to suing your auto insurance company

While suing your auto insurance company is an option, there are several alternatives you can consider if you are unhappy with how your claim has been handled. Here are some alternatives to litigation:

Review your claim and current policy

Before taking any further steps, it is important to review your claim and current policy to ensure that all the information you submitted is correct and that your insurance policy covers the reason for the damage. In some cases, a denied claim may be due to inadequate coverage or an error in the filing process. Therefore, it is worth taking the time to carefully review the types of coverage you have and the protection they offer.

File an appeal

If you feel that your claim has been unfairly denied or that there are mitigating circumstances, you can appeal the decision. To strengthen your case, be sure to include supporting documentation such as witness statements, police reports, videos, and photos of the accident scene and damage to your vehicle. A well-supported appeal may result in a reversal of the original decision.

Opt for claims mediation

Claims mediation involves a third party hearing both sides of the claim and determining an outcome based on the evidence presented. While the payout from mediation may be lower than what you might receive in court, it is often a faster process that can result in a more timely settlement.

Comply with pre-suit requirements

In some states, such as Florida, there are statutory pre-suit requirements that must be met before initiating litigation against an insurance company. For example, Florida law requires homeowners seeking to sue their insurance company for an unpaid claim to first provide the carrier with a pre-suit notice of their intent to sue. This notice may be enough to prompt the insurance company to settle the claim without the need for further legal action.

Speak with an attorney

Consulting with an attorney who specializes in insurance law can help you understand your rights and options. They can advise you on the best course of action, whether it is appraisal, mediation, or litigation. An attorney can also provide guidance on whether it is worth pursuing legal action, considering the potential time, effort, and financial investment required.

Steps to sue your auto insurance company

It's rare for an insurance company to drop you after a claim, but it can happen. Providers can cancel or opt not to renew your coverage but must provide notice. You can sue your auto insurance company if it denies your claim, the payout was lower than the agreed amount, or the company takes too long to pay you. Here are the steps to sue your auto insurance company:

• Prepare Documentation: Collect all relevant documents and communications with your insurance company, including the denial letter, your car insurance policy, repair or medical bills, and other documentation.
• File an Appeal with Your Insurer: Before taking legal action, submit a letter of appeal to your insurer explaining why your claim should be covered, along with the evidence and documentation you've gathered.
• Reach Out to an Attorney: Contact a lawyer specializing in car insurance law to determine if you have a valid case and whether it's worth the time and investment to pursue legal action.

As an alternative to suing your auto insurance company, you can consider filing an appeal or going to claims mediation. Claims mediation involves a third party hearing both sides of the claim and determining the outcome based on the evidence presented. This process can often result in a faster payout if you win the settlement.

Frequently asked questions