When you disagree with your insurance company—about a claim decision, settlement amount, or policy interpretation—you have options. Understanding the dispute resolution process helps you advocate effectively for yourself.
Types of Insurance Disputes
- Claim denials: Your claim was rejected entirely
- Underpayment: The settlement offer is too low
- Coverage disputes: Disagreement about what your policy covers
- Fault determination: You disagree with who was deemed at-fault
- Cancellation disputes: Your policy was cancelled unfairly
- Rate disputes: Premium increases you believe are unjustified
Step 1: Internal Resolution
Document Everything
Before escalating, gather your evidence:
- All correspondence with the insurer
- Your policy documents
- Photos, police reports, witness statements
- Repair estimates and receipts
- Medical records if relevant
Request a Supervisor Review
Ask to speak with a claims supervisor or manager. Often, a fresh set of eyes and more authority can lead to resolution.
File a Formal Internal Appeal
Most insurers have formal appeal processes. Submit your appeal in writing, clearly stating your position and including supporting documentation.
Step 2: State Insurance Department
If internal appeals fail, contact your state's Department of Insurance. Every state has one, and they exist to protect consumers.
What They Can Do
- Review your complaint
- Investigate insurer practices
- Mediate disputes
- Determine if regulations were violated
- Take enforcement action against insurers
How to File
Most states accept complaints online. You'll need your policy information, details of the dispute, and documentation of your attempts to resolve it directly.
Important
The state insurance department can't force a specific outcome in every case, but insurers take state complaints seriously. Many disputes are resolved once a complaint is filed.
Step 3: Appraisal and Mediation
Appraisal Clause
For disputes about the value of damage (not whether something is covered), many policies include an appraisal clause. Each party hires an appraiser, and if they disagree, a neutral umpire decides. This is binding and typically faster than litigation.
Mediation
Some states require or offer mediation for insurance disputes. A neutral mediator helps both parties reach agreement. Mediation is usually non-binding unless both parties agree to the outcome.
Step 4: Legal Options
When to Consider an Attorney
- Large claims where significant money is at stake
- Bad faith by the insurer (unreasonable delays, inadequate investigation)
- Complex legal or coverage questions
- Personal injury claims
- When other resolution methods have failed
Types of Attorneys
- Insurance dispute attorneys: Specialize in policyholder disputes with insurers
- Bad faith attorneys: Focus on cases where insurers act unreasonably
- Personal injury attorneys: Handle injury claims against other drivers' insurance
Cost Considerations
Many insurance dispute attorneys work on contingency (no fee unless you win) or offer free consultations. For smaller disputes, small claims court may be an option without an attorney.
Bad Faith Claims
Insurers have a legal duty to handle claims fairly. Bad faith occurs when they:
- Unreasonably deny valid claims
- Fail to investigate adequately
- Delay claims processing without reason
- Offer far less than claims are worth
- Misrepresent policy language
Bad faith claims can result in damages beyond the original claim amount, including punitive damages in some cases.
Tips for Successful Dispute Resolution
- Stay calm and professional: Emotional responses rarely help
- Put everything in writing: Create a paper trail
- Know your policy: Reference specific language when possible
- Keep records: Document every phone call, including date, time, and who you spoke with
- Set deadlines: Give reasonable timeframes for responses
- Escalate appropriately: Start with internal channels before going external
Knowing When to Settle
Sometimes accepting less than you want makes sense:
- The dispute involves subjective judgment calls
- Legal costs would exceed potential recovery
- You need money quickly
- The insurer's position has some validity
Getting something is sometimes better than pursuing everything and getting nothing.
Preventing Future Disputes
- Read your policy carefully before you need it
- Document incidents thoroughly from the start
- Report claims promptly
- Communicate in writing when possible
- Keep copies of everything