How Do Nevada’s Bad Faith Laws Affect First-Party Insurance Claims?

Under Nevada law, first-party insurance claimants are permitted to file bad faith claims against their insurer, due to the contractual relationship between the two parties. If an investigation reveals that the insurer in question did act in bad faith, the claimant is then eligible to receive damages.

While that’s a simple concept on paper, in practice it is much more complicated. Most claimants are surprised when their insurer doesn’t play by the rules, but as a personal injury firm, we’re here to tell you that insurance companies are never your friend, and in an ideal world they wouldn’t pay anything. Let’s take a look at how bad faith laws may affect your claim:

When Insurers Act in Bad Faith

Nevada’s insurance laws assert that every legal contract carries an obligation of “good faith and fair dealing” between the parties. Any breach of contract or failure to uphold established obligations can constitute an instance of “bad faith” from one party to another. As such, most bad faith claims arise whenever an insurer denies policy benefits without reasonable basis or justification. One thing claimants must note is that this only applies to first-party claims–Nevada law does not recognize a contractual relationship between claimants and third-party insurers, which means that third-party bad faith claims are not permitted.

By and large, there are two main ways in which claimants can establish a bad faith claim:

• One way to prove bad faith is to show that the insurer breached their duty of good faith and fair dealing without justifiable cause. In such a case, a claimants would have to prove that the insurer in question either delayed or denied payment without a reasonable cause.
• The other way to establish bad faith is to prove that the insurer exhibited deliberate or negligent disregard throughout the claim process (investigations, correspondence, payment, etc.). In such a case, the actions and correspondence of the insurer would be compared to others in similar circumstances to determine if they acted with reasonable conduct.

If a bad faith claim is filed in Nevada, it must be proven in court. The claimant must show as much proof as they can that the insurer in fact denied coverage without just cause or that they acted recklessly or negligently when conducting the claim process. One final thing to remember is that errors or disputes regarding claim valuations does not constitute bad faith in Nevada.

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What Constitutes a Successful Bad Faith Claim?

A bad faith claim must feature the following elements in order to be successful:

1. There is a contractual obligation between the claimant and insurer in question
2. The insurer was obligated to act in good faith towards the insured (claimant)
3. The insurer breached this duty or obligation in some way
4. The claimant then suffered demonstrable damages because of this breach

Even though all insurers market themselves as being the champion of claimants’ best interests, the reality is that they frequently try to do everything they can to delay, underpay, or deny claims. There are numerous ways an insurer can act in bad faith, including: unreasonable claim or benefit denials, unnecessary delays in payment, inadequate claim investigation, unacceptable policy language interpretations, and more.

One thing to keep in mind is that bad faith claims are not subject to the standard one-year statute of limitations that is normally applied to contract-related claims under Nevada law. Instead, they are free from time constraints, as the courts have asserted that it would be unjust to impose time limits for insured claimants to recover compensation they were already owed.

Questions? Contact Nevada Bad Faith Attorneys Now

If you have reason to believe that your insurer has acted in bad faith, or if you’d like to speak with experienced Nevada bad faith insurance attorneys, simply call the Van Law Firm office nearest you today. Our award-winning legal team can assess your claim and policy to determine whether or not your insurer has acted wrongly in denying or delaying your rightful compensation. Don’t wait–call now to schedule a free and confidential consultation.