Individual/Private Insurance Policy Lawsuits

Complex, Highly Contested Insurance Lawsuits

By the attorneys of Disability Insurance Law Group

In an insurance lawsuit, if the policy at issue is an individual, non-ERISA policy, then the insured person may be entitled to damages for breach of contract. This would include the amount of unpaid benefits due under the contract.

In disability or long-term care insurance claims, future benefits cannot be awarded, as they are evaluated and paid on a monthly basis. With life insurance claims, generally there is a lump sum benefit owed to the beneficiary and thus the total benefit amount at issue is usually pre-determined.

Depending on a number of different factors, including the amount of money owed to the insured, a civil lawsuit may be brought in a state circuit court or federal district court. Additionally, under the terms of most individual policies and state laws, the insured is entitled to a jury trial.

What Is Recoverable in a Private Insurance Policy Lawsuit?

Breach of Contract: Where an insured has been wrongfully denied insurance benefits, he or she may sue the insurance company for failure to perform one or more of the terms of the insurance contract. The measure of damages is the amount of benefits due under the contract. Because disability policies and long-term care policies call for periodic payments, the insured may recover only those benefits that have accrued, while under life insurance policies the benefit is usually a total pre-determined benefit amount. No recovery for future benefits is allowed when suing under a breach of contract theory.

Punitive Damages: In cases where the action is based on the breach of implied covenant of good faith and fair dealing ("bad faith") the insured person may be entitled to recover punitive damages. An insured is typically allowed to recover punitive damages proximately caused by the insurer's bad faith conduct. However, under the laws of some states, including Florida, such damages cannot be sought until after a judgment in favor of the insured has been rendered on the breach of contract issue and a Notice of Bad Faith has been filed with the carrier and Department of Financial Services.

Interest: Additionally, the insured may be entitled to interest on contractual damages according to state law. Pre-judgment interest is usually calculated on the date the insurer became legally obligated to pay, i.e., the day after the first periodic payment was due. Post-judgment interest is calculated at the time of judgment, which could be years after the initial breach of the contract.

Attorney's Fees: As for attorney's fees in a breach of contract action, most insurance policies do not contain provisions that specifically provide for attorney's fees in the event of a lawsuit. While some states adhere to the "American Rule", which states that parties seeking to enforce a contract must pay their own legal fees unless the contract specifically provides for fees, other states, such as Florida, permit a court to award costs and attorney's fees in some instances. Additionally, costs and attorney's fees may be available pursuant a state's statute. In some states, the statute will provide that the prevailing party, after a judgment in the trial court and exhaustion of all appeals, if any, may receive his or her reasonable attorney's fees and costs from the non-prevailing party.

The Need for Experienced Legal Representation

In conclusion, the law does protect an insured's right to seek damages if he or she is wrongfully denied insurance benefits pursuant to the terms of the insurance contract. While punitive damages are more difficult to obtain, the law certainly does not shield an insurance company from having to pay such damages. Often, the assistance of a qualified attorney forces the insurance company to carefully review the claim before making an unreasonable or unfavorable determination.

To discuss your legal needs with an accomplished civil trial lawyer with extensive experience in litigating insurance matters, contact Disability Insurance Law Group in Florida today. The initial consultation will be free. We serve clients nationwide.