Injury victims whose insurance providers act in bad faith can recover damages, including treble damages. Acting in bad faith refers to an insurance company’s refusal to pay a claim that it clearly should have under the contract terms.
After a personal injury, dealing with the insurance company can be challenging and complex. Many accident victims mistakenly believe the insurance company and adjusters are on their side, only to learn that they are simply looking out for the interests of the business.
Understanding Nevada’s bad faith insurance rules may help you protect your interests and right to compensation recovery.
When Is Insurance Bad Faith?
According to Nevada law, insurance companies must sincerely investigate claims. When the insurance policy covers the loss, they must settle a claim quickly. An insurance company operates in bad faith if it rejects bad faith claim settlement amounts without providing a valid justification.
An insurance firm may behave in bad faith if any of the following occur: Untimely payment in insurance bad faith cases, offering less than the value of the claim, processing the claim with an excessive amount of paperwork, denying responsibility when responsibility is clear. Other examples of possible insurance bad faith situations include ignoring the claimant and attempting to mislead the policyholder about what the policy covers, failing to provide a compelling argument to refute the assertion, and unreasonably interpreting policy language.
When they reject claims, insurance companies believe they can maximize their earnings. They believe you will simply disappear. The insurance company will profit if enough customers leave without filing a claim. This is not how the insurer ought to act.
Insurance providers have to pay losses that their policies cover, make payments promptly, and defend the insured against third-party claims where a defense is possible. If your carrier has failed to uphold any of these obligations, you may have a bad faith insurance claim.
Consider any other situation in which you would pay for a service and not receive it. Insurance companies must uphold their contractual commitments as with any other person or organization.
When insurance firms reject legitimate claims, they do it for financial gain. You keep the insurance company honest for you and all the other people who depend on the insurance company to pay claims fairly when you file a lawsuit to enforce the contract.
Elements of Bad Faith Insurance
A personal injury lawyer may opt to file a bad faith insurance claim on behalf of the insured if the insurance provider rejects a legitimate claim.
The following must be proven for the personal injury attorney to prove the claim:
- The plaintiff has an insurance agreement with the defendant
- The claim was one of the types covered by the insurance, and the plaintiff filed one with the insurer.
- The insurance provider responded inexplicably.
- The insurance provider was aware of its unreasonable behavior.
- The insurance company lacked a valid justification to reject the claim.
- Due to the insurance company’s failure or delay in paying the claim, the plaintiff experienced damages.
In Nevada, an insurance company must treat its customers fairly when it contracts with an insured person or business. Insurance holders are shielded by Nevada law against insurance companies acting in bad faith. Therefore, if such criteria exist, you may have a case to recover compensation, which may include treble damages.
What Are Treble Damages?
Treble damages are a legal provision that allows a court to triple the amount of real or compensatory damages it grants to a successful plaintiff. In some cases, treble damages are multiplied by actual damages rather than being added to them.
The purpose of these damages is to encourage citizens to file lawsuits for violations that are detrimental to society and to dissuade the violator from committing more violations.
Can You File a Bad Faith Claim with Treble Damages?
You may complain to the Insurance Department if you think your insurance provider acted unfairly. However, whether you can file a bad faith claim with treble damages is a bit unclear.
When a court rules on a case based on contract law, the only available remedies are consequential damages or those anticipated at the transaction’s time.
A court may consider punitive damages in addition to consequential damages when a bad faith claim is made, as well as damages for mental suffering. Per case law, punitive damages will only be granted if the evidence demonstrates purposeful or wanton contempt for the rights of others or reckless disdain for such rights.
Both criminal and civil remedies are available for violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) law. Therefore, treble damages and legal fees are possible penalties for civil RICO defendants. RICO has been used in various contexts and is not just applicable to organized crime.
Nevada law, which allowed for a private right of action, was not in conflict with the federal claim or affected by it; rather, it expanded the range of permissible remedies (i.e., RICO treble damages).
Exceptions to Bad Faith Claims with Treble Damages
The Employee Retirement Income Security Act (ERISA) preempts some Nevada common law tort and contract claims involving insured employee benefit plans, including bad faith. When this occurs, ERISA’s remedies are the only options. The benefits owed, the enforcement of rights under the program, and the explanation of upcoming benefits are all examples of ERISA remedies. Insurance not part of an employee benefit plan is still subject to bad faith allegations.
Bad faith is a very complex area of the law, but is sometimes necessary to help insurance policyholders obtain the benefits they are due. If you believe your carrier acted in violation of the terms of your policy in denying your claim, you may benefit from discussing your rights and options for a bad faith claim with treble damages with a personal injury lawyer.