Can You Sue Your Insurance for Denying Your Claim in Delaware?

If you have been in a motor vehicle accident in Delaware, a key consideration in seeking compensation is that most of the time your claim will settle out of court. This usually means that you will need to negotiate your claim with an insurance claims adjuster.

If the at-fault party in your personal injury claim has insurance, then you will likely be negotiating a settlement with that person’s insurance company. But sometimes, like when the other driver has no insurance and you have uninsured motorist coverage on your policy, you can find yourself making a claim with your own insurer.

Many times, when you make a claim on your own policy, you will reach a settlement payout solution that will meet your compensation needs. Sometimes, however, you can find yourself at odds with your insurer about how it has treated your claim, including delaying or even wrongfully denying it.

Can my insurance company deny my auto insurance policy claim?

There are legitimate reasons why insurance companies deny claims. Often, the reason for a claim denial involves a dispute about whether your claim falls within your policy coverage restrictions and exclusions. In close call situations, ambiguities in policy language are generally resolved in favor of your insurer, not you.

Other common reasons for claim denials include:

• Failure to pay premiums
• Errors in filing your claim
• Insurance fraud

What justifies suing my insurance company for a claim denial?

Not every claim denial by an insurance company is justifiable. Sometimes, insurance companies can deny a claim in bad faith. When that happens, you may have legal options to seek redress for an improper claim denial.

What is an insurance company’s bad faith?

Your insurance policy is a contract between you and the insurance company. When the insurance company acts in a way that breaches its contractual obligations to you, such as denying your claim without good reason, this can be construed as acting in bad faith.

Why do insurance companies deny claims in bad faith? Often, the reason involves putting profit over taking care of you. Insurance companies do not make money when they pay out settlement claims. So, they have an incentive to look for reasons to deny claims. Sometimes, this desire to save money on payouts can get the better of an insurer’s good judgment, and this can lead to bad decisions not honoring its obligations under your policy contract with them.

Some of these bad-faith insurer behaviors include:

• Unreasonable delays in investigating and processing your claim
• Unreasonable delays in paying your claim
• Denying your claim without providing a reasonable explanation for the denial
• Refusing to pay your claim when liability is reasonably apparent
• Paying less than your claim is worth
• Refusing to defend you in a lawsuit when the allegations fall within coverage

What are my options if I believe my insurer is acting in bad faith?

In Delaware, the Consumer Services Division (CSD) of the Delaware Department of Insurance is the consumer advocacy organization for insurance matters. The CSD provides services, including receiving consumer complaints about insurance companies, assisting consumers in actions or procedures to resolve disputes with insurers, and, in some cases, taking corrective actions against insurance companies when they violate Delaware statutes, regulations, or policies that the CSD enforces.

The CSD does not, however, act as your legal representative in a legal claim against an insurance company. Nor will it intervene in any lawsuit you file against an insurer. If you believe that the CSD cannot help you resolve a claim dispute against your insurance provider, then you may need to resort to legal action on your own, up to and including filing a lawsuit in civil court.

What should I do if my insurance company denies my car insurance claim?

If your insurer has denied your claim, and you believe that this denial was wrongful and the CSD cannot help you resolve it, then you can take the following steps:

The insurance company should be making a good-faith effort to settle your claim and pay you the benefits you deserve so you can cover your losses. However, your insurer may try to save money by denying your claim or by making you a lowball offer. They may not expect you to do anything about it, but there are steps you can take to fight back. These include:

• Appealing the insurance company’s decision. You should make this appeal in writing and explain in detail why the insurance company should reverse the denial.
• Gather evidence to support your claim. You should collect evidence of your injuries and financial losses in connection with your claim. Examples of relevant evidence include medical records, photographs and video footage, witness statements, pay records, and police reports. If you later decide to sue your insurer, this documentation will help your attorney to present a strong case on your behalf. Provide copies of all documentation to your insurer and keep the originals.
• Consult with an attorney. If your insurance company rejects your appeal of its claim denial, then it is a good idea to consult with an attorney to help you decide what to do next. If it becomes necessary to file a lawsuit based on wrongful claim denial, your attorney can help to prepare your legal claim and to file it in time to preserve your legal rights under Delaware’s statute of limitations for bad faith insurance claims.

What are my grounds to sue my insurance company for a claim denial?

Under Delaware law, depending on the circumstances of your case, you may be able to sue your insurance company for a claim denial based on one or more of the following legal grounds.

Bad faith denial of benefits

This contract-based claim is based on an implied covenant of good faith and fair dealing inherent in all insurance contracts. You must show that the insurance company lacked reasonable justification to delay or refuse payment of your claim. The insurer’s actions are in breach of contract, and the denial or delay must be in bad faith, meaning there was no genuine dispute or meritorious defense of the insurance company’s denial decision.

Claims based on fraud and deceptive trade practices

To succeed in a claim denial lawsuit, you must show that your claim met the policy’s coverage requirements and that the denial was not based on a legitimate reason like a pre-existing condition, failure to disclose information, or lack of coverage.

What can I recover for an unjust claim denial?

What you can recover for a successful wrongful claim denial includes compensatory damages like medical expenses, property damage, and lost wages. You may also be able to recover for additional damages or losses since the original filing of your claim.

If the insurer’s conduct was “outrageous” due to an “evil motive” or “reckless indifference” to your rights, this may be grounds for a claim for punitive damages.

Has your insurance company denied your car accident policy claim?

Coping with the aftermath of a car accident can be stressful enough without having to deal with auto insurance companies. At Silverman, McDonald & Friedman, our team puts its more than 100 collective years of experience to work for you when you have been hurt in an auto accident in Delaware. Our auto accident lawyers coordinate with insurance companies to ensure that your claims are being processed. If your insurance company is wrongfully denying or delaying your claim or attempting to unfairly reduce the value of your claim, we can help. Call us or fill out our contact form to schedule a free consultation.