Ready to learn how to sue an insurance company in a California small claims court? Learning how to sue an insurance company in a California small claims court might seem like a complicated process but in this article, we break down how small claims works!
In this article learn about:
- How much you can sue an insurance company for in small claims.
- How much going to small claims against an insurance company costs.
- The steps to suing in a California small claims court.
- What to expect during a small claims hearing.
- What information you will need when preparing to file the small claims court lawsuit.
- How to find the right legal name for the insurance company you are suing.
Common types of small claims lawsuits against insurance companies
We often receive the question, can I sue my insurance company in California small claims? The answer is yes as long as the dispute is for $10,000 or less (more on this below). Disputes with insurance companies are very common in small claims court.
Here are some examples of small claims lawsuits against insurance companies:
- Failure to pay on a covered claim. For example, your insurance company and its adjusters have denied a claim that is within the insurance policy you purchased. You can sue the insurance company in small claims and the judge will determine if the claim falls under your insurance policy.
- Failure to reimburse you for all expenses you have incurred in fixing your car. For example, you took your car to a mechanic after a car accident and spent $5,000 fixing your car. Your insurance only wants to pay you $2,000. You can sue your insurance company in small claims and the judge will determine if they should have paid you $5,000.
- No response from your insurance company. You have tried to reach your insurance company multiple times and they are ignoring your request to reimburse you. You can sue your insurance company in small claims. They will likely respond before the hearing date and if they don't, a judge will determine if you should win your lawsuit and have a valid judgment against the insurance company!
How much can you sue an insurance company for in small claims?
In California, you can sue an insurance company for a maximum of $10,000 if you are an individual. If you are a business suing an insurance company, you can sue for a maximum of $5,000.
Note, if you are a sole proprietor, you count as an individual.
By suing in small claims you are agreeing to waive any amount over the maximum amount you can sue for, even if you are owed more.
For example, if the insurance company owes you $15,000, and you decide to sue in small claims, you are waiving suing for an additional $5,000. Meaning that you will win a maximum of $10,000.
While you may be missing out on the full amount you are owed, there are practical benefits to suing in small claims instead of suing in "regular court."
Here are some of the benefits:
- Court filing fees are cheaper in small claims than in other courts.
- The process is faster in small claims than in other courts as your hearing will usually be scheduled 30-70 days after you file the lawsuit.
- Lawyers are generally not allowed in small claims which helps keep the costs of suing low.
How much does suing an insurance company in a California small claims court cost?
So how much are you going to spend by suing an insurance company in small claims court?
Court Filing Fees
The amount you will pay to file a small claims lawsuit in California depends on how much you are suing the insurance company for. You will pay between $30 to $75 to file the lawsuit. If you cannot afford to pay court fees, you can ask the court to waive the fees.
Once the lawsuit is filed, you have to notify the insurance company you sued that it has been sued. This is called "serving."
Serving Costs can range from $0-$75 per insurance company you sue.
If you win, you can request that the insurance company you sued pay for your court fees and serving costs.
What are the steps to suing an insurance company in a California small claims court?
We have outlined each one of these steps in detail, click the links to learn more.
- Prepare and file the lawsuit. Learn more.
- Notify ("serve") the insurance company you have sued. Learn more.
- Prepare for and attend the small claims hearing. Learn more.
Once the lawsuit is filed, the small claims hearing will be scheduled 30-70 days later.
What is a small claims court hearing like?
Small claims hearings in California small claims are informal and most hearings last around 15 minutes. While many disputes against insurance companies settle before the hearing, here is what to expect if your lawsuit does not settle.
Who will represent the insurance company at the hearing?
- The easiest way to answer this question is that a lawyer will not be representing the insurance company since lawyers cannot represent parties at the initial small claims hearing.
If you and the insurance company you sued, both show up:
- Right before the hearing, the judge will ask you and the insurance company representative to show each other the evidence that you will later show the judge.
- The judge will ask you why you are suing.
- The judge will ask the insurance company representative to tell them their side of the story.
- The hearing will last around 15 minutes.
- The judge will ask you to show them the evidence you brought. Sometimes the judge will keep the evidence. Other times, you will get the evidence right back.
- Very rarely a judge will tell you whether you won or lost at the hearing. Instead, the judge will tell you that their decision will be mailed to you (usually takes a few weeks to two months or so).
If you show up but the insurance company you sued does not show up:
- If the insurance company you sued does not show up to the hearing but you properly notified ("served") them, then the hearing will still take place. You don't automatically win and will still have to tell the judge why you should win.
Learn More: What is a Small Claims Court Hearing Like?
Preparing to File Your Small Claims Lawsuit Against an Insurance Company
In order to sue an insurance company in a California small claims court, you need to know:
- The correct legal entity name for the insurance company.
- Who the "registered agent for service of process" is.
When filing a lawsuit against an insurance company in a California small claims court, it is very important to write down the correct business entity on the lawsuit.
1. What does suing the "correct business entity" mean?
An example is the best way to explain this. Let's say you bought insurance from "ABC Insurance."
ABC Insurance may be a trade name for ABC Insurance, Inc or even a more remote name like The ABCDEFG Insurance Company.
Insurance companies sometimes use a name other than their real legal entity name when doing business. This is called a fictitious business name. In general, insurance companies use fictitious business names or trade names for marketing purposes if their legal entity name is too long.
What happens if I don't sue the correct business entity for the insurance company?
For one, you may be suing the wrong insurance company as many have similar names. If you win the lawsuit you will get a "judgment" against the incorrect insurance company and this will bring problems down the road.
2. Who is the "registered agent for service of process"?
- Any corporation or LLC that does business in California, has to select a person (or another business) to receive legal documents (like a lawsuit) on their behalf in California.
- While an insurance company may have its headquarters in a state other than California, if they sold you a policy in California, you will be able to serve them in California (serving the insurance company in California is also a requirement for California small claims court).
- This person (or business) responsible for receiving legal documents on behalf of the insurance company is called the "registered agent for service of process" or just the "registered agent."
- After the lawsuit is filed, this is the person (or business) who will be notified ("served") of the lawsuit on behalf of the insurance company you are suing.
- Read more below on how to find the registered agent.
How to find the correct legal entity name for an insurance company you are suing
Step 1: Make a list of any names the insurance company has used in your interactions with them.
The first place to look is your insurance policy and then the insurance company's website.
- Review your insurance policy in detail. Usually, you can find the information on the first page of the insurance policy.
- Check any communications the insurer has sent you.
- You can also run a search on the California Department of Insurance license registration page.
Step 2: Check the California Secretary of State's website
Using the list of names you have created for the insurance company, run a search on the California Secretary of State's website.
Here are some tips:
- If you don't know whether the insurance company is a corporation (the name will usually end in "inc." or "co" or have the word "corporation" in it) or LLC (the name will usually end with "LLC"), search by both categories.
- If too many similar names come up, you may want to click on the word "status" so the results are organized by businesses with "active" status.
- There are many businesses that have similar names so make sure the name you find is as close to one of the names listed on their website.
- Make sure to also click on the name of the business under "entity name" and review the addresses. If the addresses are similar to the ones on the website or when you run a general google search, then you have likely found the correct business name for the insurance company.
Make sure you write down:
- The complete legal entity name for the insurance company.
- Who the "registered agent for service of process" is. This is the person (or business) who will be served on behalf of the business you are suing. It will very likely be a business that is listed as the registered agent.
If no names come up, then run a fictitious business name search in the county where the insurance company is located or in Sacramento County (Go to step 3).
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Step 3: Determine whether the insurance company is using a Fictitious Business Name
What is a Fictitious Business Name?
Sometimes an insurance company will operate using a name other than their legal name. This is known as a:
- "fictitious business name"
- "doing business as"
California law requires insurance companies that want to do business using a name other than their legal name to register the name in the county where their principal place of business is located. The purpose of this is to ensure that when someone wants to sue an insurance company, they are able to find the registered agent for the insurance company.
Note: If their principal place of business is located outside the state of California then they must file the fictitious business name statement in Sacramento County.
If a corporation uses any name other than the legal name stated in the articles of incorporation filed with the California Secretary of State, then they may need to register the name they are using. For more information on Fictitious Business Names read the California Business and Professions Code Sections 17900-17930.
Once you find the fictitious business name, the fictitious business name registration will list the official legal entity name for the insurance company. Take the official legal entity name and run a search on the California Secretary of State's website (see the section above).
Searching using the BBB (Better Business Bureau)
Still can't find the correct legal entity name? Another option is to search on the BBB. If the insurance company has had complaints in the past, then the Better Business Bureau might have looked up the legal entity name.
How to find the right business name on the BBB
- Click here to go to the Better Business Bureau website.
- Type the insurance company name. If you know the city and state where the insurance company is located, then enter the city and state in the address box. Otherwise, leave it blank and press search.
- A list of business names will come up. You may see a different business name than the one you typed. Try clicking on "view BBB review."
- Go to the section labeled "Business Details." Determine whether it seems like that is the correct insurance company you worked with by verifying the address. The business may list who the owner is or their correct legal entity name.