Some insurance companies will deny or delay legitimate claims to avoid paying for them. When an insurance company doesn’t live up to their responsibilities, that is considered bad faith. Nevada has laws and regulations as to how an insurance company should treat its customers, and the insured party can get punitive damages if an insurance company in Nevada acts in bad faith.
(Article continues below Infographic)
What Constitutes Insurance Bad Faith
An insurance company refusing to pay a legitimate claim is one example of them acting in bad faith. They are not allowed to delay an investigation or delay the payment to a claimant. They are also not allowed to pay a policyholder less than the fair market value of their claim.
Suing the Insurance Company
Insurance companies are not allowed to require claimants to hire an attorney to collect on their claim. However, if the claimant believes the insurance company is acting in bad faith, they have the right to hire an attorney and sue the insurance company. If the court rules in favor of the claimant, the insurance company will have to pay all the claimant’s legal and attorney fees in addition to any other judgment that is made. For example, if a truck was totaled with a market value of $10,000 and the claimant had to sue the insurance company, the very least they would be compensated would be $10,000 + legal fees.
Insurance Company Must Prove Exceptions
Many times insurance companies use ambiguous language in an effort to be able to make exclusions for large claims. If something isn’t covered in a policy, it is the insurance company’s job to be able to show it in court. The insurance company must be able to show that the exclusion is clear, conspicuous, and applicable.
Punitive damages aren’t just meant to reward the claimant, they are meant to punish the insurance company for acting in bad faith. Since their driving force is the bottom line, making bad faith practices less profitable can be helpful. Individuals may be awarded punitive damages in cases where the misconduct of the insurance company seriously injured them in some way. An example of this is an insurance company refusing to settle an auto insurance claim, and the claimant losing their job as a result because they couldn’t get to work on time.