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Insurance litigation pertains to civil lawsuits involving insurance companies or insurance claims. Often, insurance lawsuits relate to an insurance policy that has been issued to a policyholder by an insurance company. Many lawsuits arise from a dispute over an insurance company's responsibility under a policy.
As there are many different types of insurance policies, the nature of insurance litigation can differ greatly from case to case. In some circumstances, a policyholder may sue their insurance company if they feel that the company owes them money under their policy but has refused to pay. These are sometimes known as "bad faith claims" as a policyholder is accusing the insurance company of shirking its obligation by refusing to pay. In other cases, an insurance company may sue a policyholder whom they feel has unfairly received money under a policy. If done knowingly or maliciously, this can be considered insurance fraud, which is a crime in most countries.
It is common for insurance lawsuits to be filed after, and in connection to, another lawsuit. For instance, a corporation may hold an insurance policy that covers that corporation's legal costs in certain types of lawsuits. If the corporation is then involved in a lawsuit that it believes should be covered under its insurance policy, it may pay the claim, then seek reimbursement from the insurance company. If the insurance company refuses to pay, the corporation will the file a lawsuit against the insurance company.
Insurance litigation can also occur between two insurance companies. These disputes are common when one corporation or person has multiple insurance policies. In a case in which the policyholder attempts to make a claim against one or both insurance companies, the companies may become involved in litigation between themselves over which company is responsible for the claim.
When an insurance company takes out an insurance policy with another insurance company, this is known as reinsurance. This allows the first insurance company to offset some of its risks by sharing the responsibilities of its policies with the second company. If a dispute arises between an insurer and a reinsurer, this can lead to insurance litigation as well.
Any lawsuit involving a contract of insurance is considered insurance litigation. Insurance companies can be involved in corporate litigation like any large companies. These cases include contract disputes, employment lawsuits, and shareholder suits.
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