Can I Sue My Own Insurance Company?

You've paid your premiums for years. Then something happens—a car crash, a house fire, a serious injury—and you file a claim. You expect the company to take care of you. That's the whole point of insurance.

Instead, they drag their feet. They ask for the same documents over and over. They lowball your claim or deny it outright. When you call, you get transferred. When you email, you get form letters. Weeks turn into months.

You're not imagining it. And you're not alone.

If your insurance company is treating you unfairly, you may have more options than you realize—including the right to sue them.

The Short Answer

Yes, you can sue your own insurance company if they act in "bad faith." New Mexico law requires insurers to handle claims honestly and fairly. When they don't—when they unreasonably delay, deny, or underpay valid claims—they can be held accountable.

Bad faith claims are different from ordinary contract disputes. They can result in damages beyond what your policy would have paid, including compensation for the harm their conduct caused you.

When you buy insurance, you and your insurance company make a deal. You pay premiums. They agree to handle your claims fairly when something goes wrong.

"Good faith" means acting honestly with the intent to reach a fair result. "Bad faith" is the opposite—when the company puts its own interests ahead of yours, the policyholder.

This isn't about an insurance company making a mistake or disagreeing with you about what your policy covers. It's about conduct that crosses a line: delays without justification, denials without legitimate reasons, or tactics designed to wear you down until you give up.

Bad faith can look different depending on the situation, but certain patterns come up repeatedly.

Unreasonable delays. The company takes months to process a straightforward claim. They request documents you've already sent. They assign your file to a new adjuster who needs to "start over." Meanwhile, you're waiting for money you need to pay bills, make repairs, or get medical treatment.

Lowball offers. They acknowledge your claim but offer far less than it's worth—hoping you're desperate enough to accept. When you push back, they don't budge.

Denials without explanation. They reject your claim with vague language or form letters that don't address your specific situation. When you ask for clarification, you get more runaround.

Misrepresenting your policy. They tell you something isn't covered when it actually is. They interpret policy language in ways that favor them over you. They "forget" to mention coverage options you're entitled to.

Failing to investigate. They deny your claim without looking into the facts. They ignore evidence you've provided. They make decisions based on assumptions rather than information.

Pressure tactics. They push you to accept a quick settlement before you understand the full extent of your damages. They imply you have no other options. They make the process so frustrating that giving up seems easier than fighting.

New Mexico has specific rules about how insurance companies must treat policyholders.

The Trade Practices and Frauds Act requires insurers to be honest about what your policy covers, respond to claims within a reasonable time, settle claims fairly when they clearly owe money, and explain their reasons if they deny coverage.

These requirements apply to all types of insurance—auto, health, life, disability, homeowner's, and others.

Insurance companies must also follow general consumer protection laws. The Unfair Practices Act prohibits misleading statements. And basic contract law means they can be held accountable if they break the promises in your policy.

If your insurance company acted in bad faith, you may be able to recover more than just what they should have paid on your claim.

The benefits you were owed. This is the starting point—what the policy should have covered in the first place.

Consequential damages. These are the harms that flowed from their bad conduct. If their delay forced you to pay out of pocket for repairs, rack up credit card debt, or miss work, those damages may be recoverable.

Emotional distress. Dealing with an insurance company that won't honor its obligations is stressful. In some cases, that distress is compensable.

Punitive damages. If the company acted willfully or with ill intent, a court can award extra damages to punish the behavior and discourage them from treating other policyholders the same way. Punitive damages aren't available in every case, but they're on the table when conduct is egregious.

Attorney fees. In some bad faith cases, the insurance company may be required to pay your legal fees.

Not every frustrating insurance experience rises to the level of bad faith. Here's what typically matters.

Documentation. The more you can show what happened and when, the stronger your position. Save every email, letter, and denial notice. Keep notes of phone calls—who you talked to, what they said, the date and time.

A clear coverage issue. Bad faith claims are strongest when the policy clearly covers your loss and the company denied or delayed without a legitimate reason. If coverage is genuinely ambiguous, the case becomes harder.

Evidence of a pattern. Did the company repeatedly ignore your communications? Did they keep changing their reason for denial? Did they fail to follow their own procedures? Patterns matter.

Harm you can prove. You need to show that their conduct caused real damage—financial, emotional, or both. The worse the impact on your life, the more significant the case.

If you're dealing with an insurance company that won't play fair, here are practical steps.

Keep everything. Don't delete emails or throw away letters. Create a folder—physical or digital—for all communications with the company. If you have phone conversations, follow up with an email summarizing what was discussed.

Put complaints in writing. Phone calls are hard to prove. Written communication creates a record. If you've been calling without results, switch to email or certified mail.

Request written explanations. If your claim is denied, ask for a written explanation citing the specific policy language they're relying on. They're required to provide this.

Don't accept pressure to settle quickly. If the company is pushing you to sign something fast, that's often a sign the offer isn't fair. Take time to understand what you're agreeing to.

Talk to an attorney who handles policyholder claims. Not all attorneys handle bad faith cases, and some represent insurance companies rather than policyholders. Look for someone who specifically advocates for people in your position.

Insurance companies know which claims have attorneys behind them and which don't. Representation changes how they evaluate your file.

An attorney can identify whether you have a bad faith claim or just a coverage dispute. They can gather the documentation needed to prove what happened. They can communicate with the company in ways that create pressure and preserve your rights. And if the company won't come to the table, they can file suit.

Bad faith cases often settle once the insurance company realizes they're facing real accountability. But being prepared to go to trial is what creates that leverage.

You shouldn't have to fight your own insurance company. But if they're not honoring their obligations, you have rights.

New Mexico law requires insurers to act in good faith. When they don't, you can hold them accountable—not just for what they owed you, but for the harm their conduct caused.

If your claim has been unreasonably delayed or denied, don't assume you're out of options. A conversation with an attorney who represents policyholders can help you understand where you stand.

At 505 Legal, we represent policyholders—not insurance companies. If your insurer has unreasonably delayed or denied your claim, we're here to help you understand your rights and hold them accountable.

Written by Kenneth H. Stalter, Co-Founder, 505 Legal.

< Older Post

Can I Sue the New Mexico Department of Corrections?

By Kenneth Stalter • May 22, 2026

If you or someone you love was mistreated while in the custody of the New Mexico Department of Corrections, you're probably wondering what options exist. Maybe a release date came and went with no explanation. Maybe medical care was denied. Maybe something worse happened. That sounds stressful. Maybe even overwhelming. The prison system is complicated, and the legal system can feel just as confusing. You're not alone in feeling uncertain about where to start. Here's the good news. You can take a breath. There are legal pathways for holding NMCD accountable when rights are violated. Some of these pathways are newer and more accessible than they used to be. Let's walk through what you need to know—the process, the deadlines, and the obstacles—so you can make informed decisions about your next steps. The short answer: Yes, you can sue NMCD for civil rights violations, and a 2021 state law made it significantly easier to do so. However, there are strict deadlines and procedural requirements that must be followed. The details matter, and they vary depending on what happened and when. But if you're confused about the specifics—what counts as a violation, which deadlines apply, or how the grievance process works—you're not alone. The process isn't obvious. Let's walk through it.