Can I Sue an Insurance Company for Denying Coverage?
By Super Lawyers staff | Reviewed by Canaan Suitt, J.D. | Last updated on June 30, 2025 Featuring practical insights from contributing attorney Jeffrey D. DiamondAn 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 providers do not always live up to their end of the bargain. Insurers are required by law to use good faith settlement practices, and when they fail to do so, they can be held legally liable. Here are four steps to prepare for potential legal action against an insurance company that has denied your claim.
1. Know Exactly Why Your Claim Was Denied

The first step to successfully appealing a denial is understanding exactly why the insurance company made the decision that it did. In an appeal or lawsuit, policyholders must address the stated reason for denial.
Insurers have a legal duty to act in good faith, which includes offering a basic explanation of claim denial. When a policyholder with a denied claim 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 of 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.”
2. Carefully Organize Relevant Evidence
All successful insurance appeals and 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.
The most important document I ever see is the denial letter from the insurance company because that tells me what the issues are.
3. Determine if You Have a Breach of Contract or 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.
But there are also other cases in which insurance coverage is denied because of negligence or bad faith. The exact definition of bad faith varies by state law. For example, the Court of Appeals of Georgia (where Diamond practices) explained that “bad faith” is any frivolous or unfounded refusal to pay according to the terms of the policy. Victims of bad faith insurance practices in the state can seek compensation for their original claim and additional damages, including a penalty worth up to 50 percent of the initial value of the claim and full attorneys’ fees and court costs.
In general, insurance companies “leverage their financial strength over policyholders,” says Diamond. 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,” he adds. “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.”
4. Get Professional Legal Representation
“The insurance company is going to insist that you comply with a number of different requests or conditions,” Diamond says. “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. In order to be fairly matched in legal action, speak with an insurance claim attorney.
Many attorneys provide free consultations. An experienced lawyer will be able to review your case and advise you if you have valid reasons for suing an insurance company, or if a lawsuit is possible in your state (a few states, such as Michigan, don’t recognize first-party bad faith insurance claims). Some questions you might want to ask a lawyer include:
- Do I have a valid claim?
- Did my insurance adjuster illegitimately deny my claim?
- What damages can I get in a bad faith lawsuit?
- What is a good settlement offer if my insurance company tries to settle?
For more information on this area of law, see our bad faith insurance overview.
What do I do next?
Enter your location below to get connected with a qualified attorney today.Additional Bad Faith Insurance articles
State Bad Faith Insurance articles
Related topics
At Super Lawyers, we know legal issues can be stressful and confusing. We are committed to providing you with reliable legal information in a way that is easy to understand. Our legal resources pages are created by experienced attorney writers and writers that specialize in legal content in consultation with the top attorneys that make our Super Lawyers lists. We strive to present information in a neutral and unbiased way, so that you can make informed decisions based on your legal circumstances.
Attorney directory searches
Helpful links
Find top lawyers with confidence
The Super Lawyers patented selection process is peer influenced and research driven, selecting the top 5% of attorneys to the Super Lawyers lists each year. We know lawyers and make it easy to connect with them.
Find a lawyer near you