Can I Sue My Insurance Company?

Last Updated on December 16, 2025

You can sue your car insurance company—but only in certain situations, and the “right” lawsuit depends on who caused the problem: the at-fault driver, their insurer, or your insurer.

Most accident-related lawsuits are filed against the at-fault driver (and handled by the at-fault driver’s insurance). But if your own insurer wrongfully denies, delays, or undervalues a valid claim—or mishandles a claim in “bad faith”—you may have grounds to take action against your insurance company.

Important: This article is general information, not legal advice. State laws vary a lot, and deadlines can be short. If you’re dealing with serious injuries or big money, it’s worth talking to a qualified attorney in your state.

Key Takeaways

• You can sue your car insurance company mainly for wrongful denial, unreasonable delays, underpayment, or bad-faith claim handling—not simply because an accident happened.
• Many crash lawsuits are against the at-fault driver; suing your own insurer is more common in first-party claims like collision, PIP/MedPay, or uninsured/underinsured motorist coverage.
• Before suing, build a paper trail: request the decision in writing, appeal internally, and consider appraisal/mediation or filing a complaint with your state insurance department.
• State law varies a lot (especially in no-fault states), so deadlines and available damages depend on where you live—an attorney consult can quickly clarify your best path.

When You Can Sue Your Auto Insurance Company

You’re most likely to sue your auto insurer in a first-party claim—meaning you’re seeking benefits under your own policy (collision, comprehensive, PIP/MedPay, uninsured/underinsured motorist, etc.).

Examples of situations where suing your insurer may be on the table include:

• Wrongful claim denial (your claim is legitimate, properly documented, and still denied).
• Unreasonable delay (your insurer drags out the investigation or payment without a valid reason).
• Lowball settlement or underpayment that doesn’t match the policy terms, repair estimate reality, or agreed scope of loss.
• No meaningful explanation for a denial or settlement offer (you’re left guessing why they won’t pay).
• Bad faith claim handling (more on this below).

If your insurer denies your claim, your next move depends on whether this is a coverage issue (your insurer) or a fault/liability issue (the other driver).

When You Usually Don’t Sue Your Own Insurer After a Crash

In many accidents, your insurer isn’t the “wrongdoer.” If another driver caused the crash, your injury lawsuit is usually against the at-fault driver (and their insurance company defends and pays up to policy limits).

Your insurer may still be involved—handling your collision claim, paying PIP/MedPay, or pursuing subrogation (getting reimbursed from the at-fault party). But that doesn’t automatically mean you have grounds to sue your insurer.

No-Fault States Can Limit Your Ability to Sue

State law matters. In no-fault states, you typically use your own PIP (personal injury protection) for certain injury-related costs—regardless of who caused the crash. Your ability to sue the other driver for pain and suffering may be limited unless you meet a state-specific “tort threshold” (for example, certain serious injuries or a medical-cost threshold).

If you’re unsure whether your state is no-fault or what your threshold is, a quick check with your state insurance department or a local attorney can save you a lot of time and frustration. (Background on no-fault rules: Insurance Information Institute.)

Insurance Companies Can Deny Claims—So the “Why” Matters

You can file a lawsuit and still lose if the insurer had a legitimate policy-based reason to deny or limit payment—like a lapse in coverage, excluded damage, missing required documentation, or a coverage limit that caps what they owe.

If the insurer investigated your claim, communicated clearly, and followed the policy and state regulations, a lawsuit may not get you further than an appeal or negotiation would.

What “Bad Faith” Looks Like in Real Life

“Bad faith” generally means an insurer failed to treat you fairly or failed to handle a claim reasonably. The exact legal standard varies by state, but common bad-faith themes include:

• Dragging out the claim process without a valid reason.
• Ignoring evidence or refusing to consider key documents (photos, medical records, repair estimates).
• Misrepresenting what the policy covers or what you’re required to do.
• Failing to explain a denial or a compromise offer in a way that actually ties back to the policy and facts.
• Using delay tactics to pressure you into taking less money.

Many states base their claim-handling standards on “unfair claims settlement practices” concepts (often influenced by NAIC model laws). If you want a feel for the kinds of conduct regulators flag, see: NAIC Unfair Claims Settlement Practices Act (Model).

What You Can Potentially Recover if You Sue Your Insurer

What you can recover depends on your claim type, your policy, and your state. In many cases, the starting point is the amount the insurer should have paid under the contract (your policy benefits). Some states also allow additional damages if bad faith is proven.

Depending on the situation and state law, potential damages may include:

• Unpaid policy benefits (repair costs, medical benefits, UM/UIM benefits, etc.).
• Out-of-pocket losses caused by the delay/denial (for example, rental car costs you had to cover yourself).
• Interest or statutory penalties in states that require it in certain scenarios.
• Attorney’s fees in states/statutes that allow fee-shifting (not universal).
• Emotional distress or punitive damages in limited circumstances (varies widely and usually requires more than a simple dispute over value).

Before You Sue: Steps That Often Work (and Build Your Paper Trail)

Even when a lawsuit is possible, you’ll usually want to try the “clean” escalation steps first—because they’re faster, cheaper, and they create documentation if things later go sideways.

• Read your coverage closely. Many disputes come down to misunderstandings about deductibles, exclusions, rental reimbursement limits, “actual cash value” vs. replacement cost, or whether you even have the coverage you think you do.
• Ask for the decision in writing. If you were denied or lowballed, request a written explanation that references the specific policy language and the evidence used.
• Appeal the claim internally. Most insurers have a formal review/appeal process—especially for disputed facts, documentation issues, or valuation disagreements.
• Use your policy’s dispute tools. Many auto policies include an appraisal process to resolve disputes about the amount of loss (for example, repair cost or vehicle value). Some states also offer mediation programs for certain disputes (example: California DOI Auto Claims Mediation).
• File a complaint with your state insurance department. If you think your insurer is stalling or acting unfairly, regulators can sometimes prompt a faster, clearer response. The NAIC explains how to do this here: How to File a Complaint (NAIC).

If your insurer won’t pay or is stalling even after you escalate, that’s when speaking with an attorney becomes much more valuable.

Schedule a Free Consultation with a Personal Injury or Insurance Attorney

Many attorneys offer a free consultation. An attorney can help you figure out:

• Whether your dispute is really about coverage, fault, or valuation
• Whether your state recognizes a bad faith claim in your situation
• What your deadlines are (including any notice requirements)
• Whether alternatives (appraisal, mediation, arbitration) are required or smarter first steps

If you’re unsure who to call, start with an attorney who regularly handles insurance disputes, including auto claims. (More guidance here: when to hire an auto insurance lawyer.)

FAQs on Suing Your Car Insurance Company

Final Word

You may be able to sue your insurance company—but the best move depends on your coverage, your state, and whether the issue is a normal claim disagreement or something more serious like bad faith.

Start by understanding your policy, getting decisions in writing, and escalating through appeals, appraisal/mediation options, and your state insurance department. If you’re still stuck—or the money and injuries are significant—talk to a qualified attorney about whether a lawsuit makes sense.