How to Sue an Insurance Company for Denying Coverage

Legal tips for arguing bad faith or breach of contract in Georgia

By Super Lawyers staff

An insurance policy is a contract. As a policyholder, you uphold your end of the agreement by paying your premiums. In return, the insurance company is required to offer you coverage when it is appropriate. Unfortunately, insurance companies do not always live up to their end of the bargain. Under Georgia law, insurers are required to use good faith settlement practices. When they fail to do so, they can be held legally liable.

If your insurance claim was denied in bad faith or if the insurance company made an error, you have the right to sue for coverage.

Know Exactly Why Your Claim Was Denied

When a policyholder whose coverage has been denied comes to Jeffrey D. Diamond, an insurance attorney in Atlanta, he asks them for a few items.

“I ask for a copy of the policy, a copy the fire report or police report, copies of all communications received from the insurance company, copies of the estimates of damage,” he says, “but the most important document I ever see is the denial letter from the insurance company because that tells me what the issues are.”

Under Georgia law, insurers have a duty to offer a basic explanation of why they are denying coverage. The first step to successfully appealing a denial is understanding exactly why the insurance company made the decision that it did. In an appeal/lawsuit, policyholders must address the stated reason for denial.

Carefully Organize Relevant Evidence

All successful insurance appeals/lawsuits are based on a foundation of supporting evidence. Once you understand the insurance company’s reasons for denying your claim, you should carefully gather and assemble relevant evidence to make a strong, persuasive appeal.

The type of evidence that a policyholder needs will always depend on the specific nature of the case. For example, in a property insurance case, the core dispute may be over the total value of the repairs. In this situation, the plaintiff would need to provide evidence supporting the value of their losses.

Get Professional Legal Help

“The insurance company is going to insist that you comply with a number of different requests or conditions,” Diamond says. “They know what it's asking, and if you don't play the game right, you can’t stuff the genie back in the bottle, so to speak.”

The primary objective of an insurance company is to protect its own bottom line. Insurers handle coverage disputes frequently, and these companies put a lot of resources into preparing for litigation. If you believe that your insurance claim was wrongly denied or the company used bad faith, you need professional representation. An experienced Georgia bad faith insurance attorney can review your case and help you take the proper steps to protect your rights and interests.

Consider Filing a Bad Faith Claim

In some cases, insurance companies deny coverage because of reasonable mistakes or legitimate disputes over facts or law. When this occurs, the policyholder has the right to file a lawsuit over the breach of contract. Of course, there are also other cases in which insurance coverage is denied because of negligence or bad faith.

As the Court of Appeals of Georgia explained in the case of King v. Atlanta Cas. Ins. Co., “bad faith” is any frivolous or unfounded refusal to pay according to the terms of the policy. In Georgia, victims of bad faith insurance practices can seek compensation for their original claim and for additional damages, including a penalty worth up to 50 percent of the initial value of the claim and full attorneys’ fees and court costs.

Georgia is an insurance-friendly state, Diamond says, and as such companies “leverage their financial strength over policyholders.” They rely on policyholders’ lack of knowledge in this arena, but attorneys are there to help.

“I'd love to be able to tell people, ‘Read your policy,’ but the problem is that it's a lot of gobbledygook that no one understands,” Diamond says. “They say, ‘If you don't understand what's going on, ask questions.’ Well, they don't know what questions to ask. So a lot of times after a loss, people have to scramble because they don't have the right coverages or understanding.”

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