Dealing with the insurance company after a personal injury can be confusing and frustrating. Many injury victims begin to think that the insurer and adjusters are on their side, only to realize that they are simply trying to protect the company’s bottom line.
When an insurance company fails to pay a claim that it obviously should pay under the terms of the contract, it is called acting in bad faith. It is essential for injury victims who believe their insurance company is acting in bad faith to contact an experienced personal injury attorney to discuss strategies to obtain the necessary compensation for a full recovery. Here’s what you need to know about Nevada’s bad faith insurance laws.
What is bad faith?
Nevada law requires insurance companies to investigate claims honestly. They must pay a claim within a reasonable period when the insurance policy covers the loss. An insurance policy is a contract under Nevada law . Each party to a contract has an obligation to comply with the terms of the agreement. When an insurance company denies a claim without good reason, they are acting in bad faith.
Any of the following actions may constitute bad faith on the part of an insurance company:
- Late payment
- Offer less than the claim is worth
- Require an unreasonable amount of paperwork to process the claim
- Deny responsibility when responsibility is obvious
- Trying to mislead the insured about what the policy covers
- Ignoring the person making the claim
- Not giving a good reason for denying the claim.
- Interpreting policy language in an unreasonable way.
The opposite of bad faith is good faith. Insurance companies must:
- Pay for losses that are covered by your policies.
- Make the payment in a reasonable time.
- Defend the insured against third party claims when there is a viable defense
- Resolve claims when they must under the law.
What damages are available when a company acts in bad faith?
When an insurance company acts in bad faith, it can recover damages that result from breach of contract. First, you can get back what the insurance company should have paid under the policy. You can then receive compensation for the cost of your legal fees to carry out the action to enforce the insurance policy.
It is natural to have mental suffering and emotional distress when an insurance company wrongly denies a claim. You can recover those damages too. In general, punitive damages are available in cases where the insurance company’s denial is part of a larger pattern of bad faith on the part of the insurer.
United States excess. Co. v. MGM Grand Hotel
In the Nevada Supreme Court case, American Excess Ins. Co. v. MGM Grand Hotel , the court defined bad faith as actual or suggested knowledge of the lack of a reasonable basis for denying benefits under an insurance policy. The court said that good faith is faithfulness to a common purpose, such as the terms of a contract.
In the MGM case, more than 3,000 victims filed claims after a hotel fire. MGM had $ 30 million in liability insurance and they sued the insurer to make the payments. The court determined that the insurance company should have made the payments.
However, they found that the insurance company’s initial denial was based on a good faith belief that they did not have to make payments until MGM resolved all claims. The insurance company had to pay under the contract, but they did not owe more in bad faith.
Why are insurance companies acting in bad faith?
Insurance companies act in bad faith for one simple reason: profit. Insurance companies think they can maximize their profits when they deny claims. They expect you to go away. If enough people leave without fighting with the insurance company, the company succeeds. The insurer must not act in this way. Imagine any other scenario where you pay for a service and don’t get what you pay for.
Insurance companies have the same obligations to comply with their contractual agreements as any other person or organization. Insurance companies are motivated by profit when they reject valid claims. When you take legal action to enforce the contract, you keep the insurance company honest for you and everyone else who needs the insurance company to pay their claims honestly.
How do I prove my claim?
A bad faith insurance claim is a partial violation of contract law and a partial personal injury law . On the one hand, you must prove that the insurance contract requires the insurance company to pay. You will have the jury review the contract and ask them to decide that the insurance company arbitrarily refused to pay.
Second, you must show that your injury claim is the type that is covered by the insurance policy, considering who is responsible for the claim. You must prove that you have a loss covered by the policy.
Finally, you must prove bad faith. To prove your bad faith, you document the actions of the insurance company when investigating your case. You can use Nevada’s rules of civil procedure to make a formal discovery and collect records from the insurance company. The paper trail can tell the story of the insurance company’s investigation of the claim. You can also conduct interviews and formal statements from insurance representatives to show the jury how the insurance company acted on your claim.
What can I do to prove bad faith?
When making a claim with an insurance company, keep all copies of your correspondence. If you speak on the phone, be sure to document when you spoke and make notes of the conversation. Records are critical to proving the bad faith of the insurance company.
How a Personal Injury Attorney Can Help
If you believe that an insurance company may have acted in bad faith, it is essential that you contact an experienced Las Vegas personal injury attorney. Your attorney will have the experience to handle bad faith insurance and help you obtain the compensation you deserve under Nevada Law.
Nevada courts provide you with an avenue to obtain fair compensation. However, there are time limits for filing an injury claim in Nevada , so it is critical to act quickly, especially if you suspect that the insurance company is acting in bad faith. Don’t let your insurance company pay you less than what you deserve.