Can I sue my insurance company for costs they forced me to incur after denying a claim?

UPDATED: Sep 8, 2011

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Can I sue my insurance company for costs they forced me to incur after denying a claim?

Had water in my basement due to power outage. Called the insurance comp to start a claim. They advised me to call a service company for water remediation. I contacted the insurance company again before the service company came out. Insurance company assured me that everything would be covered to get started. The company came out and did some work and returned 2 days later to remove their equipment. Then the insurance adjuster came. Later I got a call from the main adjuster saying that my claim would be denied because there was no coverage for sump pump overflow. Now I have to pay the service company when I could have done work myself.

Asked on September 8, 2011 under Insurance Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you feel that the insurer was wrong to deny you coverage, you can sue to force them to pay what you feel they should. This would be a lawsuit under the insurance policy, which is a contract, for the insurer's breach of its obligations.

While suing them, you could also sue them for the costs you incurred on reasonable reliance on their statement that the servcie company cost would be covered. If someone makes a representation or promise which it would be reasonable to rely on (i.e. the average person would understandably assume the statement was true) and you incur some loss or cost due to your reliance on it, that can give rise to a cause of action.

Bear in mind that winning is not guaranteed; but from what you write, it may be worthwhile pursuing a claim, possibly (if the amount is $1,200 or less, for example) by representing yourself in court to save lawyer fees (e.g. suing in small claims court).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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