Insurance bad faith is when an insurer handles a claim unreasonably, by denying it without a real basis, dragging it out, or offering far less than it is worth. Van Law Firm pursues an insurer’s bad faith as part of an injury claim we are handling in Nevada, Washington or California. Consultations are free.
- Part of your injury claim, not a separate case. We raise an insurer’s conduct within the claim we are already handling for you. We do not take bad faith matters on their own.
- Most often your own insurer. It comes up most in underinsured and uninsured motorist claims, where the company refusing to pay is the one you pay premiums to.
- Three states, three sets of rules. Nevada, Washington and California each handle insurer misconduct differently, and Washington is the strongest of the three.
- Free consultation. No obligation consultations are always free.
What Counts as Insurance Bad Faith?
Every insurance policy carries an obligation to deal with the policyholder honestly and reasonably. Bad faith is the breach of that obligation. A denial by itself is not bad faith, because an insurer is allowed to deny a claim it has a genuine reason to dispute. What makes conduct bad faith is the absence of a reasonable basis for it.
First Party and Third Party Claims Are Not the Same
The live pages do not draw this distinction anywhere, and it is the single thing readers get wrong most often.
- First party. Your claim against your own insurance company, under a policy you hold. This is where bad faith law gives you the most, and it covers underinsured and uninsured motorist claims, medical payments coverage, and property claims.
- Third party. A claim against the at fault person’s insurance company. You have no contract with that company, so in general you cannot bring a bad faith claim against it directly, and the remedies are different.
In short, the insurer you can usually hold accountable for bad faith is your own.
Common Bad Faith Practices
The live Las Vegas page lists these in general terms. Replaced with the practices Nevada law actually names, which is both more useful and more quotable. The existing substance is preserved.
Nevada lists sixteen specific unfair practices in settling claims at NRS 686A.310. The ones that come up most often in injury claims are below.
- Misrepresenting policy provisions or the facts of a claim
- Failing to acknowledge and act reasonably promptly on communications about a claim
- Failing to affirm or deny coverage within a reasonable time after proof of loss is submitted
- Failing to reach a prompt, fair settlement once liability has become reasonably clear
- Offering substantially less than the amount ultimately recovered, so the insured has to sue to get what they are owed
- Failing to give a reasonable explanation for a denial or a low offer
- Advising an insured or claimant not to seek legal counsel
- Misleading someone about the applicable statute of limitations
Under NRS 686A.310(2), an insurer is liable to its insured for damages caused by any of those practices.
How Bad Faith Fits Into an Injury Claim
This is the section that carries the client note. It is placed in the middle rather than at the end so a reader cannot miss it.
Most people do not set out to bring a bad faith claim. They have an injury claim, and somewhere along the way the insurance company starts behaving unreasonably. That is when the conduct becomes part of the case.
Van Law Firm handles it that way. When we are representing you on an injury claim and your insurer mishandles it, we raise that conduct within your claim and pursue what the law allows for it. We do not take bad faith matters as cases on their own, so if that is the only issue, you are better served by a firm that handles insurance disputes exclusively.
The situation where this comes up most is an underinsured or uninsured motorist claim, because that claim is against your own insurer rather than the other driver’s.
What the Law Says in Each State
Nevada
NRS 686A.310 lists the unfair claim settlement practices above and makes an insurer liable to its insured for damages caused by them.
Nevada law also sets time limits on how an insurer handles a claim. In most cases, insurers are allowed up to 20 working days to acknowledge the receipt of a claim, up to 30 working days from the date proof of loss is provided to answer, and once a claim is accepted, it must be paid within 30 days.
Those timeframes come from the Nevada Administrative Code at NAC 686A.665 and the sections following it.
Washington
Washington gives policyholders the strongest remedy of the three states. Under the Insurance Fair Conduct Act at RCW 48.30.015, a first party claimant who is unreasonably denied a claim for coverage or payment of benefits may sue to recover actual damages along with costs, reasonable attorneys’ fees and litigation costs.
Two things make that statute unusual. A court may increase the award to as much as three times the actual damages after finding the insurer acted unreasonably, and the award of attorneys’ fees and litigation costs to a prevailing first party claimant is mandatory rather than discretionary.
California
California lists unfair claims settlement practices at Insurance Code section 790.03, but an individual cannot sue an insurer directly under that statute.
A California bad faith claim is instead brought as a breach of the implied covenant of good faith and fair dealing that exists in every insurance contract. The practical result is similar, but the claim rests on case law rather than on the statute, and the statute is used as evidence of what unreasonable conduct looks like.
What Can Be Recovered
Built on the existing “Damages Available in Insurance Bad Faith Cases” section. Substance preserved, organized, and no dollar figures or predictions added.
- The benefits that should have been paid. The amount owed under the policy in the first place.
- Losses caused by the delay or denial. What went wrong because the money did not arrive, such as medical treatment that had to wait or debts that built up.
- The cost of making the insurer pay. In Washington, attorneys’ fees and litigation costs are awarded to a prevailing first party claimant by statute.
- Punitive damages in some cases. Available where the conduct goes beyond an ordinary dispute, and the standard for it is high in all three states.
How to Document What the Insurer Is Doing
Built on the existing “Proving Insurance Company Bad Faith” section and expanded. This is the most practically useful thing on the page.
Bad faith is proved with a record, and the record is easiest to build while it is happening rather than afterwards.
- Keep every letter, email and claim document the insurer sends
- Log each phone call with the date, the name of the person, and what was said
- Keep your own notes about what you were told and when
- Keep medical bills, repair estimates and photographs of the damage
- Ask for the reason for a denial in writing, since a refusal to explain is itself a listed practice
- Note the dates on the deadlines above, because the clock starts when you submit, not when the insurer decides to look at it
How Long Do You Have?
The deadline that usually matters is the one on the underlying injury claim, because that is the case the insurer’s conduct sits inside.
In Nevada, an action for personal injury must generally be brought within two years under NRS 11.190(4)(e).
In Washington, the general period for a personal injury action is three years under RCW 4.16.080(2).
In California, it is two years under Code of Civil Procedure section 335.1.
A claim against an insurer can run on a different clock depending on whether it is framed as a breach of contract or as a tort, so the deadline on that part should be confirmed on the facts rather than assumed from the injury deadline.
Where We Work
- Washington bad faith claims:
- Las Vegas bad faith claims:
- How Nevada bad faith law affects first party claims:
Frequently Asked Questions
Is it bad faith if my claim was denied?
Not on its own. An insurer is entitled to deny a claim it has a genuine reason to dispute. It becomes bad faith when there is no reasonable basis for the denial, or when the insurer never did the work to find out, such as denying without investigating or refusing to explain the reason.
Can I sue the other driver’s insurance company for bad faith?
Generally no. Bad faith protections run to the policyholder, and you have no contract with the other driver’s insurer. Your own insurer is different. If you are making an underinsured or uninsured motorist claim, that is a claim against your own company and the bad faith rules apply.
Do you handle bad faith cases on their own?
No. We pursue an insurer’s bad faith as part of an injury claim we are handling for you. If an insurance dispute is the only issue and there is no injury claim behind it, a firm that handles insurance litigation exclusively is a better fit, and we will say so.
What can I recover in a bad faith claim?
It depends on the state, and usually includes the benefits that should have been paid plus the losses the delay or denial caused. Washington goes furthest. Under RCW 48.30.015 a court awards attorneys’ fees and litigation costs to a prevailing first party claimant and may increase the award to as much as three times the actual damages.
How long does an insurer have to respond to my claim in Nevada?
In most cases, insurers are allowed up to 20 working days to acknowledge the receipt of a claim and up to 30 working days from the date proof of loss is provided to answer. Once a claim is accepted, it must be paid within 30 days.
What should I do while the insurer is delaying?
Keep the record. Save every letter and email, log each call with the date and the name of the person you spoke to, and ask for any denial and its reasons in writing. Those records are what a bad faith claim is built from, and they are much harder to assemble after the fact.
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