If you're angry enough to consider filing a lawsuit against your
insurance company, make sure you do so only as a last resort, after
all negotiations have failed. If there is an acceptable
alternative, a courtroom is the last place you want to be.
Peter Moraga, spokesperson for the Insurance Information Network
of California, says that often matters can be settled between
yourself and your insurer through negotiation. If you feel like
your claims adjuster isn't being fair with you, "you should go to a
higher-up in the company," Moraga advises. "It may be a supervisor.
There is always a process."
It's important for you to take an active role in the
claims process, but give your claims adjuster adequate time to work
on your case.
If you threaten to file a lawsuit simply as a negotiating
tactic, be aware that the strategy could backfire. The word
"lawsuit" will likely set off alarm bells at your insurance company
and you may suddenly find yourself dealing with a lawyer instead of
a claims adjuster. Insurers are so sensitive to the possibility of
home and car insurance litigation that, in some cases, they may
assign an attorney if they merely suspect that a suit is coming,
says Amy Bach, executive director of the United Policyholders
If you proceed, here's a taste of what to expect: A lawsuit will
likely be costly and highly adversarial. It will probably slow down
or halt your claims process overall, not speed up your payment. And
don't expect your insurance company to come crawling back after you
file a lawsuit. "The insurance companies generally will not
continue to communicate with a policyholder who has hired a
lawyer," says Bach. "That is the way things work in the real
Things get ugly
Once you file a lawsuit, your insurance company must assign its
own attorney to the case. "There will be a period of silence while
they pick a lawyer and review the file," Bach says.
will cease to be a helpful guide through the claims process, says
Douglas Heller, executive director of the Consumer Watchdog
organization. That's because insurance agents ultimately have
responsibility to the insurers for whom they sell policies.
If aggressive attorneys get involved on either side, it can
become difficult to keep the lines of communication open, Bach
says. "Things can get ugly fast."
In such cases, Bach recommends trying damage control. You should
write to the insurance company and ask it to continue working with
you on home or
issues that fall outside the bounds of the suit. For example, if
extensive home damage has caused a lawsuit, but there is no dispute
about what needs to be done to repair the kitchen, "the consumer
can continue to work with the company to adjust that part of the
Most legal disputes are resolved in mediation rather than a
courtroom, but not right away. Bach says to expect the
process to take six months or more.
If the matter goes to trial, which is unusual, the case may take
between one and three years to resolve, "depending on the judge,
the court and the personalities of the lawyers," she adds. "If they
are hell-bent on fighting over everything, it will drag things
Your state department of insurance
Another path toward resolution is a complaint against the
insurer. Bach says it's a good idea to file a complaint with
your state department of insurance
whenever you feel you have been abused by the system. Just don't
expect your state insurance commissioner to resolve a complicated,
"If they see an obvious violation of a law or regulation, they
will tell the insurer and they will issue a fine if it is a serious
violation," she says. "But most of the time they will send a copy
of the complaint to the company and give the company a chance to
tell their side. They will tell the policyholder they do not have
the authority to adjudicate. But the department will have a record
of the complaint" that may help with future enforcement issues. For
example, an insurance department might launch an investigation if
they see a pattern of similar complaints against an insurer.