When to Hire an Attorney for an Insurance Claim

Do You Need an Attorney for Insurance Claims?

Whether you need an attorney for an insurance claim depends on the complexity of your situation and whether legal assistance is truly necessary.

The majority of claims aren't complex and can be settled directly with the insurance company without the need for an attorney. For instance, if the incident was minor, liability is clear and damages were minimal, you may not need legal representation. However, for more complex claims where there are significant damages, liability disputes or complicated legal issues getting help from an attorney may be well advised.

Scenarios Where Hiring an Attorney Might Be Wise

There are some situations where getting an attorney's help may be needed for getting an adequate payout or otherwise pursuing compensation from the insurance company.

The Insurance Company Is Unfairly Withholding Payment

When your insurance company delays payment beyond what's outlined in your policy or allowed by state law, you may need to hire an attorney. Some states require insurers to explain any payout delays. If you haven't received an explanation or payout, an attorney can demand an explanation and urge the insurance company to pay promptly.

The Insurance Company Isn't Paying Enough to Cover Your Damages

When the insurance company's settlement offer isn't enough to cover your losses and you've already tried to challenge the insurer's decision, an attorney can step in to work toward a fair resolution. They can negotiate for you or file a lawsuit if that's the best course of action.

Note that in accidents where your vehicle is declared a total loss, the policy may only cover the actual cash value of your vehicle. Unless you have gap insurance, you're responsible for paying the loan balance (if you have one) left after your insurer pays out.

The Insurance Company Is Acting in Bad Faith

There are a number of valid reasons an insurance claim may be denied—the policy lapsed, your claim fell under an exclusion or you didn't notify the insurance company in time. If your claim is denied without valid reason or you suspect bad faith practices, it's worth consulting with an attorney. They can interpret policy coverage to determine whether your coverage is being fully applied and advocate on your behalf.

The Insurance Company Asks You to Speak to an Attorney

If the insurance company requests that you speak with their attorney, you also need legal representation. This ensures your interests are also protected during any negotiations. The insurance company may be building a case of its own and could use something you say to invalidate your claim or incriminate you.

You Have a Complex Case

It may be difficult for insurance adjusters to accurately determine damages in complex cases involving lots of details. Complex cases may require help from a skilled attorney, especially those involving multiple parties or large amounts of money. Working with an attorney can help you determine whether to file a lawsuit.

You or a Passenger Was Injured

After a car accident, an attorney can help you or a passenger receive fair compensation for your injuries. Determining fault, liability and the extent of the losses (including medical expenses, lost wages and non-financial losses), adds time and complexity to many personal injury cases. It can be helpful to have an attorney help build and determine the value of your case. Depending on the circumstances of the case, it may be better if you and the passenger share an attorney.

Most personal injury attorneys—who you'd hire after a car accident with injuries—work on contingency, so you won't need to pay anything upfront for them to take your case. They'll take a portion of your settlement or jury award for payment.

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Advantages of Hiring an Attorney

An attorney can navigate the claims process, negotiate on your behalf and ensure you receive fair compensation for your losses. Here are some advantages of hiring an attorney to help with your insurance claim.

• More legal knowledge and experience: An experienced attorney can provide you with the proper guidance, ensure your rights are protected and determine whether you need to file a lawsuit to pursue damages. They also can make sure, if a lawsuit is necessary, that it's filed within the right timeline.
• Negotiate higher settlements: An attorney can investigate your case, hire expert witnesses and find evidence to support your claim. They can include medical records and medical bills, if they're relevant to your claim, to ensure all your accident-related costs are covered by the insurance payout.
• Spend more time and effort on your case: An attorney can handle communications with the insurance company and track information relevant to your case. Note that getting an attorney involved may impact the amount of time it takes to get a payout.

The Bottom Line

If you're wondering whether you need a lawyer, you can discuss the details with an attorney to get a professional opinion. Many attorneys offer low- or no-cost consultations and may even take your case on contingency—their fee is taken out of any compensation you receive.

Filing an insurance claim or suing an insurance company won't affect your credit score. However, if you miss payments while you're waiting for your payout, your credit could be affected. Consider using your emergency fund to cover bills while you're waiting for compensation. In the meantime, keep an eye on your credit report and credit score to ensure you're in good financial standing.