When Should I Sue My Insurance Company or File a Claim?

You're driving on a wet road when your car hydroplanes and crashes. Your insurance company agrees you weren't at fault and agrees to pay for your repairs. But several months later, you get a bill for the same amount from your insurance company again.

We have seen this happen too often with insurance companies: They agree to pay their customers after accidents or collisions, only to ask for the money back once the customer can no longer dispute it.

This leaves many people wondering if they should sue their insurance company or file an official claim against them. Each situation is different, but here are some things to consider before making that decision.

What is insurance payout?

Insurance payout is money provided by an insurance company to cover losses that result from an accident or damage caused to you or your property. The payout amount will depend on your insurance policy and the injuries you claim.

When you are involved in a car accident, your auto insurance provider will pay for repairs to your vehicle as well as medical bills if you are harmed.

If you have homeowners' or renter's insurance, they will cover any damages to your home or property that results from the accident.

Why would your insurance company ask for repayment?

An insurance company might ask you to repay the money you received if any of the following happened:

• You declare that you weren't at fault for the accident, and the other party disagrees.
• You didn't have proper coverage at the time of the accident.
• You were under the influence of drugs or alcohol at the time of the accident.
• You misrepresented yourself on your insurance application. If you were to blame for the accident, the insurance company would judge you to have engaged in "bad faith" behavior. This is when someone does something fraudulent or dishonest, like lying to their insurance company about the accident or failing to disclose medical conditions that would have affected coverage. If this happens, the insurance company can ask for the money back.

• You didn't have proper coverage at the time of the accident. Your auto insurance company might ask you to repay the money if they discover that you had insufficient coverage at the time of the accident. The company would have paid the difference if your damages were more than your coverage. They can ask you for that money back if they have to pay the difference again.

At the time of the collision, you were under the influence of drugs or alcohol.

The insurance company has the authority to request a refund if you were under the effects of drugs or alcohol at the time of the accident.

This is because your actions were negligent and caused damage to others. You will also likely face criminal charges and lose your license due to your actions.

Your insurance company may also try to void your policy or deny future claims you make.

You lied on your insurance application.

Your insurance company could void the policy if you lied on your insurance application. They can also ask for the money back if the procedure was underwritten.

If you failed to disclose a medical condition that would have affected coverage, your insurance company could void the policy.

In these cases, the company can ask for the money back.

Can you sue your insurance company?

Yes, you can sue your insurance company under certain circumstances. You would file a lawsuit against the company for breaching their contractual obligations to you.

If you discover that the company was not meeting the terms of your contract, you can file a breach of contract lawsuit.

You can also use your insurance company in bad faith. This happens when the company fails to meet the reasonable expectations of its customers. You can also see if your insurance company committed fraud.

If your insurance company did any of these things, you could sue them in court to get the money back.

Can you file a claim instead?

Yes, you can file a claim against your insurance company. Once you file a claim, your insurance company must investigate the circumstances of the accident. They will either pay or refuse the claim after the inquiry is completed.

When you were at fault for the accident and your insurance company ordered you to refund the money, it is usually better to file a claim. You can dispute their decision once the investigation is complete. If you file a claim, you don't have to repay the money.

If you owe money to the company, you should probably file a claim. However, if you were not at fault for the accident, you can dispute the company's decision to ask for repayment.

In this case, you should file a claim and then dispute the company's decision after completing the investigation.

When should you choose to sue

You should consider suing your insurance company if all the following apply:

• Your investigation is complete, and the insurance company has not paid your claim.
• You have exhausted all other dispute resolution options, such as filing a complaint with your state's insurance regulator.
• The amount of money you are owed is significant enough to warrant the time and expense of taking legal action.

If any of these things don't apply, you are probably better off filing a claim against your insurance company.

Conclusion

When dealing with insurance companies, emotions can run high. You can often get the best outcome by remaining calm and taking the appropriate action.

You will likely face challenges if you sue your insurance company or file a claim against them. Keep detailed records of all communication with your insurance company, including emails, texts, and voicemails.

Keep all documentation related to the accident, including repair estimates and medical bills. By being thorough and organized, you can better protect your interests and resolve your issues more quickly and efficiently.