First Party Insurance Litigation
Holding Insurance Companies Accountable for Wrongfully Denied, Delayed or Underpaid Claims
When you purchase insurance, you expect your insurance company to be there when you file a rightful claim. Whether your home has been damaged by a storm, your uninsured or underinsured auto insurance refuses to pay, your business has suffered a significant property loss, you seek Long-Term Disability benefits, or you are seeking benefits under another type of policy, you have the right to expect your insurer to fairly evaluate your claim and honor the coverage you purchased.
Unfortunately, that does not always happen.
When an insurer unreasonably denies, delays, undervalues, or mishandles a legitimate first-party claim, policyholders may have legal options.
At Myers & Woods Law Firm, our attorneys advocate for policyholders in disputes with their own insurance companies. We help individuals and businesses understand their policies, challenge improper claim decisions, and pursue the insurance benefits they may be entitled to receive.
What Is a First-Party Insurance Claim?
A first-party insurance claim is a claim you make directly against your own insurance policy for a covered loss.
Unlike a third-party claim, where you seek compensation from someone else’s insurance company, a first-party claim involves the contractual relationship between you and your insurer.
First-party claims can arise under many different types of insurance policies, including:
- Homeowners insurance
- Commercial property insurance
- Auto insurance
- Life insurance
- Disability insurance
- Business interruption coverage
- Fire and smoke damage coverage
- Wind, hail and storm damage coverage
- Water damage coverage
- Other property and casualty policies
Your policy is a contract. When you submit a claim, your insurance company is responsible for evaluating that claim according to the policy’s terms and applicable law.
When First-Party Insurance Claims Go Wrong
Insurance claims can be complicated, and disagreements over coverage do not necessarily mean an insurer has acted in bad faith. However, policyholders should pay attention when an insurance company appears to be unreasonably delaying, denying or reducing benefits that may be owed under the policy.
Problems with first-party claims can include:
- Wrongful claim denials: Denying a potentially covered loss based on an unreasonable interpretation of policy language or exclusions.
- Unreasonable delays: Allowing a claim to remain unresolved without a reasonable explanation or repeatedly postponing payment.
- Underpayment of claims: Offering substantially less than the amount reasonably necessary to address a covered loss.
- Inadequate investigations: Failing to properly inspect damage, review relevant documentation or consider evidence submitted by the policyholder.
- Repeated requests for information: Continually requesting additional documents or information without reasonably moving the claim toward resolution.
- Misapplication of policy exclusions: Relying on exclusions that may not reasonably apply to the circumstances of the loss.
- Failure to properly value a loss: Underestimating repair, replacement or other covered costs.
- Failure to communicate: Providing inadequate explanations regarding coverage decisions, delays or payment calculations.
What Does Bad Faith Mean in a First-Party Insurance Claim?
Insurance companies are expected to handle claims fairly and in accordance with their contractual and legal obligations.
Bad faith claims may arise when an insurance company refuses to fulfill those obligations in handling a policyholder’s claim. Whether conduct legally constitutes bad faith depends on the facts of the claim, the policy language and applicable law.
Potential warning signs can include an insurer:
- Failing to conduct a reasonable investigation
- Unreasonably delaying a coverage decision
- Denying a claim without a reasonable basis
- Failing to adequately explain the reason for a denial
- Ignoring evidence supporting coverage
- Unreasonably interpreting policy language
- Significantly undervaluing covered damage
- Delaying payment after coverage has been established
- Using claim-handling practices designed to discourage a policyholder from pursuing legitimate benefits
Not every insurance dispute is bad faith. However, when an insurer’s conduct goes beyond a reasonable disagreement over coverage, an experienced first-party insurance attorney can evaluate whether additional legal claims may exist.
Examples of First-Party Insurance Disputes
Storm and Hail Damage
A severe storm damages your home’s roof, siding and interior. You file a claim with your homeowners insurance company, but the insurer attributes much of the damage to age or wear and tear rather than the storm. If the evidence supports storm-related damage, the coverage decision may warrant further review.
Fire and Smoke Damage
A fire causes extensive damage to your home or business. Although the insurer acknowledges the loss, disagreements arise over repair costs, replacement costs, damaged contents or the extent of smoke remediation needed.
Water Damage
A sudden water event causes significant damage to your property. Your insurance company denies the claim based on a policy exclusion. The specific cause of the water damage and the language of the policy may become critical in determining whether coverage exists.
Commercial Property Loss/Business Disruption
A business suffers substantial property damage that interrupts operations. Disputes may arise regarding the value of the physical damage, covered business income losses, necessary repairs or the period required to restore operations.
Underpaid Property Claim
Your insurer accepts that a loss is covered but estimates repairs at an amount significantly below estimates from contractors or other professionals. A dispute may arise over the appropriate scope and cost of restoring the property.
Your Insurance Policy Is a Contract
When you pay premiums for insurance coverage, you are entering into a contract with your insurance company. That contract establishes both your responsibilities and the insurer’s obligations when a covered loss occurs.
Insurance companies generally have obligations related to investigating claims, evaluating coverage, and paying benefits owed under the policy. They should not place their financial interests ahead of their contractual obligations to policyholders.
When an insurer fails to honor the terms of the policy, a policyholder may have a claim for breach of contract. Depending on the circumstances and applicable law, unreasonable claim-handling conduct may also support a bad faith claim.
Potential Remedies in a First-Party Insurance Dispute
The remedies available depend on the insurance policy, the insurer’s conduct, the type of loss and the law governing the claim. Depending on the circumstances, a policyholder may be able to pursue recovery for:
- Unpaid insurance benefits
- Additional covered losses
- Damages resulting from a breach of the insurance contract
- Damages resulting from bad faith claim handling, when legally available
- Attorney fees and costs when authorised by applicable law
- Statutory Penalty
- Other compensatory damages
- Punitive damages in cases where the applicable legal standard is satisfied
Every insurance claim is different, and the availability of particular damages should be evaluated based on the specific facts and applicable law.
We Represent Policyholders in First-Party Insurance Disputes
When your own insurance company denies, delays, or underpays a claim, it can leave you facing both the original loss and an unexpected financial burden.
Myers & Woods Law represents policyholders in first-party insurance disputes. Our attorneys examine the insurance policy, claim file, damage documentation, insurer communications and circumstances surrounding the coverage decision to determine whether benefits have been improperly denied or undervalued.
When insurance companies fail to honor their contractual obligations or engage in actionable bad faith, we work to hold them accountable and pursue the compensation our clients may be entitled to receive.
If your insurance company denied, delayed or underpaid your claim, you do not necessarily have to accept its decision as final. Call today to speak with an experienced first-party insurance attorney about your rights and options.