Insurance lawsuit

An insurance lawsuit is a legal action where an individual or entity sues an insurer for denying, delaying, or underpaying a valid claim. Policyholders often file insurance lawsuits after insurers deny claims related to auto accidents, property damage, health treatment, or life coverage–according to the NAIC, nearly 8% of homeowner claims end in litigation.

Insurers may defend themselves in insurance lawsuits by citing policy exclusions, misrepresentation, or alleged fraud, with court records showing common defenses such as non-covered losses and lapsed policies. In most states, policyholders initiate insurance lawsuits within two years of denial due to statutes of limitation; California requires filing within one year for fire insurance claims (California Insurance Code §2071).

Plaintiffs in successful insurance lawsuits frequently recover compensatory damages for unpaid benefits, legal fees, and in some states like Texas and Florida, “bad faith” damages if insurers acted egregiously–Texas courts awarded $25 million in bad faith punitive damages in Amica Mutual v. Dumas (2016).

Insurance lawsuits generally proceed through civil courts but may enter federal courts when parties reside in different states or when claims exceed $75,000. Mediation and arbitration frequently precede trial in insurance lawsuits; the American Arbitration Association handles thousands of such disputes annually, according to a report from YourInsuranceInfo.

Most insurance lawsuits settle before trial: industry data shows about 95% resolve via negotiated settlement or alternative dispute resolution processes. Complex commercial insurance lawsuits sometimes involve multiple parties including reinsurers and adjusters–for example, the $1 billion World Trade Center litigation involved over a dozen defendants and multiple insurers.

Plaintiffs require documentation such as denial letters, policy copies, estimates from licensed professionals (e.g. roofers in hail damage cases), and evidence of loss to prevail in court. Policyholders retain attorneys specializing in insurance litigation because these specialists are statistically more likely to secure favorable outcomes; Martindale-Nolo reports that represented plaintiffs succeed 64% of the time versus 39% without counsel.