How Do I Know If I’m a Victim of Bad Faith Insurance?

How Do I Know If I’m a Victim of Bad Faith Insurance?

You will know you are a victim of bad faith insurance if your insurance company fails to meet its policy obligations or adhere to state laws. The bad faith insurance practices employed by your insurer will depend on whether you are pursuing a first-party or third-party claim. Generally, an insurance company acts in bad faith when it fails to investigate your claim properly, denies your claim without a justifiable reason, or tries to misinterpret policy terms or laws. 

If your insurance company is subjecting you to unnecessary stress or has denied your claim in Reno, Nevada, you might ask, “how do I know if I’m a victim of bad faith insurance?” The best way to know if you are a bad faith insurance victim is to involve a bad faith insurance lawyer immediately after you notice potential signs of poor practices. A knowledgeable lawyer can differentiate lawful insurance practices from unlawful ones. The lawyer can also maximize your compensation by negotiating with the insurer or litigating the case on your behalf. An example of successful litigation is a case where the jury awarded $200 million

Types of Bad Faith Insurance

What is an insurance bad faith claims practice? There are two main types of bad faith insurance claims: first-party and third-party claims. 

First-Party Bad Faith Insurance Claim 

This claim arises when you take action against your insurance company for failing to pay a covered loss. In this claim, you believe your insurer has refused to cover your damages or process your claim correctly. 

Third-Party Bad Faith Insurance Claim 

This claim happens when you assert that your insurer has failed to fight for you and your interests in a claim filed against you by a third party. 

Signs the Insurance Company Is Acting in Bad Faith

Bad faith insurance practices occur in a variety of situations. While no two circumstances are the same, there are signs that you can look for to determine if the insurance company is acting in bad faith. 

Fails to Investigate Your Claim Properly 

Your insurer might be acting in bad faith if it does not investigate your claim or fails to perform a complete investigation. An improper investigation may include undue delays, failure to reach out to the involved parties, and ignoring crucial evidence. 

Misinterprets Policy Terms or Laws 

Your insurance company may trick you into accepting its decision to deny or lowball your claim by misrepresenting its policies or state laws. The insurer may, for instance, use ambiguous language, cite irrelevant clauses in the policy, or cite outdated or irrelevant laws to confuse you. 

Denies Your Claim without a Justifiable Reason 

Insurance companies have the right to deny claims. They must, however, support their denial decision with valid arguments. Your insurer could be acting in bad faith if it denies your claim without providing any reason or provides an unjustifiable explanation. In this situation, you may have the right to sue an insurance company for denying your claim

Delays Paying an Approved Claim

Failing to pay an approved claim within a reasonable timeframe could be an act of insurance bad faith. Your lawyer can investigate the issue to determine if it is a lawful delay or a bad faith insurance tactic. 

Fails to Fight for Your Interests in Third-Party Claims

Your insurer must fight for your best interests when a third-party files a claim against you. Failure to defend you or handling the defense carelessly could be a bad faith insurance action. 

What to Do if You Are a Victim of Bad Faith Insurance

So, what do you do if you think that you are a victim of bad faith insurance practices? Steps you can take to protect your rights, preserve key evidence, and pursue a fair outcome include:

Carefully Going Through Your Insurance Contract 

Get a copy of your original insurance contract from your insurer and review it carefully. Check the date of the insurance contract to verify its originality. Ideally, it should be dated earlier than your claim date. Ensure the provisions of your insurance contract covers your claim. 

Maintaining Comprehensive Documentation of Your Claim 

You will need evidence to show your original claim is valid and covered by the provisions of your contract. Keep a detailed record of all documents submitted to the insurer and communications with your insurer. 

Likewise, keep a record of your meetings with your insurer, specifying the date, involved parties, and a summary of the interaction. Document the actions of the insurance adjuster investigating your claim if you feel the adjuster is engaging in bad faith practices. You can, for instance, request the adjuster to justify his or her actions in writing. You can then enter the date of that request in your records. 

Sending a Bad-Faith Demand Letter 

Draft a detailed bad-faith demand letter and send it to your insurer, especially if actions you feel are in bad faith do not stop. The letter should specify the interactions and events that you think are in bad faith. Use a return receipt to obtain evidence of sending the letter. 

Ensure you involve a bad faith insurance lawyer at this stage if you are not working with one already. A lawyer with a demonstrated history of handling insurance bad faith disputes will increase your chance of getting the best outcome from your bad faith demand letter.

Submitting a Complaint to Your State Insurance Department 

Make a complaint to the Nevada Division of Insurance if the insurer or claims adjuster keeps acting in bad faith despite receiving your bad-faith insurance letter. Support your complaint with a copy of the bad faith demand letter and the evidence you have already compiled.

The division will investigate the alleged illegal actions of your insurer. The division will penalize the insurer if it has engaged in bad faith practices. It’s important to note that the division cannot force your insurer to settle your claim. An insurance company that has acted in bad faith will most likely try to settle the claim before this stage to avoid hefty fines. 

Initiating a Bad Faith Lawsuit 

Initiating a bad faith lawsuit is your final option if all your efforts to settle with the insurance company fail. You will need to navigate confusing insurance and legal issues when suing for bad faith insurance. Having a skilled lawyer on your side can help you do everything correctly. Your lawyer will determine which court has jurisdiction over the bad-faith insurer. The lawyer will also identify other potential claims you can add to the lawsuit.