Car Insurance Company Lawsuits

Car insurance company lawsuits can result from disputes over insurance claims, as well as other issues, such as the following:

• Disputes about Insurance Rates and Fees: An insurance company may want a person to pay more for coverage than the person thinks they should have to pay;
• Non-payment of Premiums: If a person does not pay their premiums when they are due, their insurance can be canceled and then their coverage ends. A person wants to make sure they pay when payment is due and know the status of their coverage;
• Cancellation or Non-renewal of a Policy: Car insurance can be canceled or not renewed for a variety of reasons, often specified in state laws. The most common reason for cancellation is non-payment of premiums when they are due;
• Denial of a Claim: A car insurance company may deny an insured person’s claim for payment for damage to their care or personal injury suffered in an accident.

A common lawsuit for wrongful denial of claim is a lawsuit for insurance bad faith. A person has a right to expect their car insurance company to promptly pay a legitimate claim for a loss that is covered by a policy and if their insurance company does not come through when needed, a person should speak with a personal injury lawyer.

In addition, lawsuits against a car insurance company may often be pursued as class action lawsuits. These may result from broader issues such as company-wide fraud involving a large number of consumers or unfair business practices.

When Can My Car Insurance Company Cancel My Policy?

It is important to understand that car insurance companies can legally cancel a person’s car insurance policy for a variety of reasons as follows:

• Fraud in an Application: If a person did not fully disclose necessary information in their application for car insurance and the insurance company finds out, it can cancel a person’s policy. A car insurance company relies on several factors to set a person’s insurance premium, such as their vehicle’s “garaging” address, and who routinely drives the car. Failing to report this information truthfully and accurately is often referred to as a “material misrepresentation,” otherwise known as “fraud”;
• Accidents and Tickets: If a person has been at-fault in causing car accidents or has too many moving traffic violations, e.g. speeding tickets, they can expect their car insurance to be canceled. Generally, if a person is responsible for too many accidents or gets too many tickets within a certain period of time, e.g. 36 months, their car insurance is likely to be canceled. A person would then be considered a high-risk driver and might have to turn to special insurance companies who cover high-risk drivers, at a greater cost to the driver, of course;
• License Suspension or Revocation: If a person’s driver’s license or vehicle registration has been revoked or suspended, their policy can be canceled. Generally, if a person has experienced a suspension or revocation within the policy period of their current insurance policy, or within 36 months before the notice of cancellation, their policy could be canceled.
  • If a regular driver of an insured car has their driver’s license suspended, then the car insurance company might require that this person be excluded from coverage under the policy. In effect, this means that this person could not drive the car. If they were to drive the car, the policy could be canceled;
• Making a Fraudulent Claim: If a person files a claim, or someone else makes a claim against the person’s insurance policy, the person is expected to provide complete and accurate information to support the claim. If the person purposely fails to do so, their insurance company could cancel their policy;
• Medical Conditions: If a person has a medical condition that makes it more risky for them to drive safely, they might need a certificate from a physician attesting to their ability to drive safely. Health conditions such as epilepsy and a history of heart attacks or strokes can trigger the need for doctor’s attestation of a person’s fitness to drive;
• Criminal Convictions: A person has been convicted of a felony or forfeited bail for certain specified criminal offenses. If a person who is a regular driver of an insured vehicle commits a felony, such as driving under the influence, their policy can be canceled;
• Unsafe Vehicle: If a person’s car is not safe to drive, their insurance can be canceled. The car may have mechanical problems that are significant enough to endanger public safety. Also, if the state in which a car is registered requires regular inspections and the registered owner does not have the car inspected or it fails inspection, this may serve as grounds for cancellation;
• Business Use of Car: If a person uses their car for business purposes, then it cannot be covered by an insurance policy for a personal car. For example, if a person uses their car to travel to job sites or make deliveries, these would be business uses. If a person uses their car for work, (and not just commuting to and from work), they should get a commercial auto policy;
• Driving for Hire: If a person is using their car to drive passengers for hire for a rideshare company such as Uber or Lyft and does not tell their insurer, the insurer can cancel their insurance policy. This is because driving for hire can increase the likelihood of a claim.

Another way in which people can lose insurance coverage is through non-renewal. Non-renewal takes place when a policy is due for renewal and the insurer decides not to continue it after the policy expiration date. An insurance company would notify a person if it decides not to renew their policy.

Reasons for non-renewal can be similar to those for cancellation, such as nonpayment and misrepresentation on an application. Some states, such as New York and Oregon, allow an insurance company not to renew a policy if the insured person’s credit information turns negative, or if their insurance score falls below a certain point, probably because of accidents or tickets for moving violations.

What Is Car Insurance Fraud?

Fraud on the part of insurance companies is also a possibility. Clearly, fraud perpetrated by a car insurance company could create costly problems for a person insured by the company. Car insurance fraud methods may include:

• Misrepresentation of car values and car prices;
• Use of fraudulent or fake insurance documents;
• Misleading advertising or marketing practices;
• Using duress or coercion to get a person to sign an insurance policy;
• Engaging in insurance activity without a license, e.g. presenting oneself to the public as a licensed insurance broker when in fact the person does not have a license;
• Misrepresenting policy provisions so that when a person makes a claim, they find they do not have the insurance coverage they thought they did.

How Can I Protect Myself from Car Insurance Legal Issues?

In order to avoid car insurance problems, it is important that a person understand the terms of any insurance policy contract before they sign it. This may require reading it carefully and asking questions about its provisions. A person should also be informed about what kind of coverage is required in their state. A person can always have a professional review a policy. A person may wish to consult a lawyer for help when it comes to buying insurance, negotiations with insurance companies, auto accident claims, and other issues.

Also, a person should understand how any action suggested by a car insurance company would affect them. For instance, if the insurance company suggests to a person that their car be declared a total loss after an accident, the person should check to see whether this is the most beneficial option for them.

Do I Need a Lawyer for Help with a Car Insurance Legal Issues?

If you have issues of any kind with your car insurance company, you want to consult with an experienced insurance attorney. Your attorney can advise you on any changes to insurance law relating to car insurance in your state. They can review your policy and help you make sure that the coverage you have is adequate for your needs.

They can also represent you in negotiating with your insurance company and file a lawsuit if that should become necessary. Insurance companies are advised by their lawyers and you should get legal advice for yourself to protect your rights.