How to Sue an Insurance Company for Negligence

By: | January 18th, 2023

Photo by Vlad Deep on Unsplash

For most Americans, insurance coverage is an essential expense designed to protect the policyholder from unexpected issues and hardships. Naturally, this relationship between provider and client must be built on a solid foundation of trust, but what happens when a provider behaves negligently?

Insurance providers are subject to a large number of state and federal regulations as well as government agencies put in place to protect their customers against negligent or misleading behavior, though to ensure that companies are appropriately reprimanded for breaking these rules, clients must understand their local laws. 

Beyond this, it will be down to the customer and their legal representatives to prove that the insurance company or agent has behaved in a provably negligent manner, and as a direct result has caused the client financial, physical or mental harm. Here’s how to sue an insurance company for negligence.  

Legally Defining Negligence

In order to build a successful legal case against a negligent insurance company, the policyholder must be able to prove without reasonable doubt that the company and its agents have acted in a negligent manner. In legal terms, this definition will generally require proof of the following: 

  • Duty – The company had a duty to act or refrain from acting in a particular manner 
  • Breach – The company breached this duty by failing to perform as promised 
  • Cause – The company’s actions caused harm that should have been foreseen 
  • Damages – The policy holder suffered measurable financial, physical or mental damages 

It’s also important to remember that an insurance company can be found guilty of negligence without proof of intent, meaning regardless of whether the company intentionally acted to cause harm to the policy holder, if these four elements are proven they’ll still be found legally responsible for damages. 

Small Claims vs Civil Lawsuits 

The next step towards suing an insurance company will involve deciding whether the case will be best tackled in small claims or a civil court of law. A civil lawsuit will be most appropriate if the financial damages you’re seeking are particularly high, though the exact monetary value varies across states.

For example, to successfully sue an insurance company in LA through a small claims court the damages sought can be no more than $10,000, though in Florida this value cannot exceed $5000. 

Additionally, some states do not allow legal representation in small claims court cases, this is particularly evident in the state of California, though both parties will be permitted to discuss the lawsuit with hired legal professionals both before and after court proceedings to help each party prepare their case.  

Filing a Lawsuit 

In order to begin legal proceedings, the plaintiff must file a legal complaint. For civil cases this process can be handled entirely by the plaintiff’s professional legal team, though for cases to be brought before a small claims court the filing of the lawsuit must be undertaken by the plaintiff themselves. 

The lawsuit must be filed in the county where the incident in question occurred, or in the county where the plaintiff or defendant resides. In most cases, an appointed judge will decide upon all subsequent legal actions, though in some states either party will be permitted to request a full jury trial. 

A complaint form will need to be filled out, with information pertaining to the reason for the lawsuit, though it’s important that this description is left undetailed to prevent the defendant from planning any counter arguments. A few weeks after the complaint has been submitted and the filing fee has been paid, both parties will receive correspondence detailing the trial date, time and assigned judge.  

Expected Compensation for Insurance Negligence  

Though the damages clients are permitted to seek in a lawsuit for negligence will generally be less than those awarded for intentional actions, a denial of expected coverage and any compounding damages suffered as a direct result can often entitle policy holders to a large compensatory sum. 

For example, if the policy holder is found to have been denied significant financial payments or benefits because of the company’s negligence, they could be awarded an equal amount in damages. 

Additionally, compensation can be sought for a range of tangential damages, including:  

  • Emotional distress 
  • Loss of income 
  • Medical expenses 
  • Inconvenience
  • Loss of enjoyment of life 
  • Diminished earning capacity 

Plaintiffs should also be aware that in most jurisdictions insurance companies cannot escape liability by claiming that the client has failed to read their policy, though it is common for companies to argue that this oversight indicates at least partial responsibility. Whilst this may affect how compensation is ultimately awarded, plaintiffs should still pursue their claims regardless of whether this can be proven. 

Final Word 

The US legal system is designed to protect all Americans from harm and wrongdoing, though to successfully navigate this often-complicated framework, citizens should have a good understanding of their local laws. Before filing a complaint against any insurance company, policy holders should be confident that they can reasonably prove negligence within the bounds of their local legal system.

Consider whether the damages sought indicate a small claim or a civil lawsuit and consult with a trusted legal professional to begin the processing of an official complaint. Remember to ensure that the defendant is not aware of the fine details of your case, and to operate within the bounds of local legislation.


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