Is Time Running Out on Your Ability to File a Bad Faith Insurance Claim?

Is Time Running Out on Your Ability to File a Bad Faith Insurance Claim?

The statute of limitations for bad faith insurance claims in Nevada is based on statutory grounds or common law. Claims filed under statutory grounds must be filed within three years of the violation, while claims filed under the common law must be filed within four years.

Filing a Bad Faith Insurance Claim in Nevada

According to Nevada law, insurance companies have a duty to act in good faith and provide fair services to all policyholders. If an insurance company breaches its duty to provide a fair assessment of policy benefits, it is considered to be acting in bad faith. If an insurer denies a claimant’s benefits for no apparent or good reason, the claimant is permitted by the Nevada Supreme Court to file a claim or lawsuit with a bad faith insurance attorney against the insurance company.

In Nevada, a bad faith insurance claim can be filed under statutory grounds or under common law:

Statutory Grounds

Under statutory grounds, the Unfair Claims Settlement Practices Act (UCSPA) defines specific regulations that govern the actions of insurance companies. These regulations are set in place to make sure that insurers provide fair, ethical insurance practices to policyholders. If an insurer violates the UCSPA, the policyholder has a right to file a bad faith claim against the insurer and seek damages incurred as a result of unfair practices. In Nevada, a bad faith claim filed as a result of UCSPA violations must be filed within three years of the violation.

Common Law

As for common law bad faith claims, Nevada recognizes an implied covenant of good faith and fair dealing in every insurance contract. A breach of the covenant gives rise to a bad faith tort claim. Bad faith is established when an insurer acts unreasonably or negligently and with the knowledge that there is no reasonable basis for its conduct. According to Nevada law, a bad faith tort claim must be commenced within four years of the adverse action by the insurance company.

The Unfair Claims Settlement Practices Act

Most states have enacted a version of the law referred to as the Unfair Claims Settlement Practices Act (UCSPA), although specifics of the law can vary from state to state. This act protects insurance buyers from unjust behavior and unfair claim settlement practices. The act is enforced by individual state insurance departments.

The UCSPA establishes standards for the investigation and settlement of claims that arise under certificates of insurance and insurance policies. The law typically applies to all policies except for those related to workers compensation, surety bonds and fidelity coverage, and equipment malfunction. Policyholders who believe that their insurance company has violated their state’s UCSPA can file a complaint with their state’s department of insurance. All complaints are investigated by state insurance officials to determine if the insurance company has committed a violation. Insurers who violate the law may be subject to fines and other penalties.

If a policyholder files a claim or brings a lawsuit through a bad faith insurance attorney, the case must be proven in court according to Nevada insurance laws. If an insurance company simply fails to pay policy benefits, delays benefits, disputes the claim, or makes errors in claim valuations, this does not constitute bad faith according to Nevada laws. The insured party must prove that the claim was denied without reasonable basis and/or that the insurance company acted negligently or recklessly when reviewing or investigating the claim.

Insurance companies frequently attempt to deny or underpay claims, even if they acknowledge that the claim is covered under the insurance policy. Examples of bad faith include:

  • Unreasonable or unexplained denial of a claim
  • Unreasonable or unexplained denial of benefits
  • Intentional delay of benefits without cause
  • Negligent, reckless or untimely investigation of a claim
  • Misrepresentation of policy benefits or policy language
  • Refusal to settle a claim or compensate a claimant for damages

Damages for Bad Faith Insurance Claims

If a bad faith insurance case is proven in a Nevada court, the insured policyholder may recover the benefits for the claim designated under the policy, as well as losses and damages suffered for lost income, emotional distress, and attorney fees. In some cases where the insurance company has exhibited intentional negligence or reckless actions, damages are not limited to actual losses sustained by the insured. Punitive damages can also be awarded to punish the insurance company and to deter other insurers from acting in bad faith.

To collect damages for a bad faith insurance claim, a plaintiff must prove the case in court by proving the following: the insured party and the insurance company entered into a contractual agreement; the insurance company owed a duty of good faith to the insured; the insurance company breached the duty of good faith, and the insured party suffered damages as a result of the breach.