When you’re injured in a car accident or dealing with a claim, the last thing you expect is for your own insurance company to act unfairly. But can you sue a car insurance company for negligence? The short answer: yes, in certain circumstances — and knowing your rights is critical.
Understanding Negligence by a Car Insurance Company
Negligence happens when the insurer fails to handle your claim with reasonable care, causing you harm. Examples include:
- Delaying claim payments without valid reason
- Denying legitimate claims without proper investigation
- Offering unreasonably low settlements
- Failing to communicate in a timely manner
When these actions lead to financial or emotional harm, legal action may be possible.
7 Powerful Reasons to Sue a Car Insurance Company for Negligence
1. Bad Faith Insurance Practices
Insurance companies have a duty of “good faith” toward policyholders. When they intentionally delay, deny, or underpay, it crosses into “bad faith,” which is often grounds for legal action.
2. Unreasonable Claim Delays
If your case is being dragged out for months without explanation, it may be negligence. Long delays can leave you unable to repair your vehicle or cover medical expenses.
3. Failure to Investigate Properly
A rushed or incomplete claim investigation could cost you thousands. This is one of the clearest signs of insurer negligence.
4. Misrepresentation of Policy Terms
If the insurer provides false or misleading information about your coverage, you may have a strong case.
5. Pressure to Accept Low Settlements
Offering an unreasonably small amount compared to your damages can be a breach of their duty.
6. Ignoring Clear Evidence
When you have police reports, photos, and witness statements but the insurer still refuses to pay fairly, that’s negligence.
7. Causing You Additional Harm
Negligence isn’t just about money — emotional stress, damaged credit, and delayed treatment can all be consequences.
Legal Options When an Insurance Company Acts Negligently
Before you rush to court, consider these steps:
- Document Everything – Keep emails, letters, and phone logs.
- File an Internal Complaint – Some insurers resolve disputes without legal action.
- Contact Your State’s Insurance Department – Many offer consumer protection services.
- Hire an Experienced Attorney – They can assess your claim and take legal action if needed.
For detailed consumer rights, visit the National Association of Insurance Commissioners.
Can You Sue a Car Insurance Company for Negligence in All States?
The ability to sue depends on state law. Some states have strong “bad faith” statutes, while others limit lawsuits to breach of contract claims. Always check your local regulations before proceeding.
What Damages Can You Recover?
If successful, you might recover:
- Compensatory damages – For financial losses like repair bills and medical costs
- Emotional distress damages – For stress and suffering caused by the insurer’s actions
- Punitive damages – In extreme cases to punish the insurer
Prevention Tips: Protect Yourself Before Trouble Starts
- Review your policy carefully each year
- Keep detailed records of all interactions
- Report claims promptly and in writing
- Consider working with an independent insurance agent
FAQs
Can you sue a car insurance company for negligence if you’re not their policyholder?
Yes, in some cases, such as when the company mishandles a claim in which you’re the injured party, even if the policyholder is the other driver.
How long do I have to sue an insurance company?
It depends on your state’s statute of limitations, typically 1–4 years.
Is it expensive to sue an insurance company?
Many attorneys work on a contingency basis, meaning they only get paid if you win.
Will suing affect my current policy?
Possibly. Some insurers may choose not to renew your policy after a lawsuit.