Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 22, 2020

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Here's what you need to know...

  • Suing an auto insurance company takes due diligence on the plaintiff’s behalf
  •  It’s quite common for people to sue another party’s auto insurance company when hurt in an accident
  • Lawyers charge by the hour or require an initial retainer

The answer to whether or not to sue an auto insurance company frequently depends on what the lawsuit would be for.

It’s quite common for people to sue another party’s auto insurance company when hurt in an accident or suffering property damage from someone’s car.

Such lawsuits would typically be for enforcement of the existing insurance contract with a customer, bad faith denial of coverage by the insurance provider, or outright fraud.

Choose some of the highly rated auto insurance companies to make sure you don’t get stuck in this situation.

Enter your zip code into our FREE auto insurance comparison tool to see rates offered to you from reliable auto insurance companies now.

Suing Another Company

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Suing another driver’s auto insurance company frequently occurs in the form of a tort lawsuit or personal injury suit.

The plaintiff’s lawyer will contact the insurance company’s lawyers and demand recovery in the form of a settlement prior to a full lawsuit.

In these situations, the plaintiff’s lawyer defers charging for his services to instead take a percentage of the recovery paid, usually one-third of the total amount.

This makes it easy for a person to sue another driver’s coverage, but the end result may not fully pay for all expenses involved.

However, if an opposing insurance company low-balls a settlement payout, a lawsuit should be initiated at least to force the payout to be higher.

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Enter your ZIP code below to view companies that have cheap auto insurance rates.

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Suing Your Own Provider

As mentioned earlier, suing one’s own insurance provider typically occurs to:

  • Enforce the existing auto insurance coverage agreement,
  • Fight a bad faith denial of coverage by the insurer
  • Recover from fraud intentionally performed by the insurance provider.

Enforcement of a coverage agreement and bad faith denial of coverage tend to go hand-in-hand. Normally, such a lawsuit would be a contractual issue, which can require a plaintiff to pay out of pocket for a lawyer until the suit is won.

This can be quite expensive when lawyers easily charge $300 per hour of work.

Lawyers frequently require payment in one of two ways: a monthly retainer or by the hour. A monthly retainer is a lump sum paid for a generally-agreed availability to act as a lawyer.

Payment by the hour occurs when specific services are required like going to trial.

Lawyers for individuals in non-tort cases frequently want a retainer payment at first and then switch to hourly billing when the case heats up for trial.

However, when an insurance company knows it should provide coverage and purposefully avoids doing so to avoid the cost, you can sue the car insurance company for a bad faith denial of coverage.

In many states, this sort of behavior triggers a tort action which can result in triple damages against the insurer, including punitive damages.

Some tort lawyers will take such cases on if they are a clear win, usually for a percentage of the settlement or judgment recovery versus a regularly-paid legal bill.

Fraud potentially occurs when the insurer actively goes out and takes people’s money for coverage and then never provides any service, the whole time intending to steal the monies paid.

Cases of substantiated fraud can trigger both civil and criminal lawsuits against the insurer, but many times the people running the operation have disappeared.

Judgment Call

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There are many instances where consumers should protect their financial interests with legal resources. When doing so, however, the consumer needs to understand how the lawsuit will likely play out and who will pay the legal representation up front.

None of the above should be interpreted by a reader to not file a lawsuit at all.

In most cases, a consumer is not going to know for sure if he can sue his auto insurance company until he does talk to a personal injury lawyer.

An initial legal consultation tends to be very affordable or even free, depending the lawyer involved.

Most lawyers only charge $50 to $100 to sit down for 30 minutes and just find out about a potential case. In turn, the attorney can then spell out the likelihood of success to a consumer and how the costs for suing would have to be paid.

Compare to Avoid Problems

With the use of Internet comparison websites, consumers can do a bit of research to avoid auto insurance companies that may likely cause problems later on, leading to a lawsuit.

In addition, much of the data is free to access. Using these Internet-based search sites, a consumer can see price differences between big and small companies for certain coverage policies.

Additionally, some sites provide customer opinions, which can be used as patterns to signal whether one insurer is easier to work with than another.

Frequently, smaller operations have more difficulties as they focus more on watching policy claims to lessen payouts, which in turn tends to get customers upset.

Enter your zip code into our FREE auto insurance comparison tool below to see rates that could save you money from reliable companies.