How to File a Bad Faith Insurance Claim

How to File a Bad Faith Insurance Claim

Reviewing contract terms, gathering all relevant evidence and documents, and documenting denial of a claim are the first steps in filing a bad faith insurance claim. Another crucial step is appealing the insurance company’s decision. If the insurance company refuses to reverse the claim denial, the claimant can then write a demand letter to the company.

If the insurer responds negatively or fails to respond within the time limit stated in the demand letter, the claimant can file a complaint with the Nevada Division of Insurance. If the insurance company refuses or fails to pay the claim despite great efforts, the claimant can then file a bad faith insurance claim. An insurance attorney can negotiate a fair settlement with the insurance company or file a lawsuit on the claimant’s behalf as required.

If the bad-faith claim or lawsuit is successful, the claimant may recover the original insurance benefits plus losses and damages suffered. The claimant may also receive punitive damages under specific circumstances.

How to File a Bad Faith Insurance Claim 

Reviewing Insurance Contract Terms

Before commencing the process of filing a bad-faith lawsuit, the claimant should carefully review the terms of the insurance contract first. The claimant should know what is covered and what isn’t covered. This knowledge will help the policyholder determine the possible reasons for claim denial

The policyholder should obtain a full copy of the contract for review. Sometimes insurance companies revise their policies without notifying policyholders. Getting a copy of the insurance contract before filing a claim is a wise decision. The policyholder should ensure the insurance contract’s language covers the loss suffered.

Gathering Relevant Evidence and Documents

An insured consumer must demonstrate that his or her insurance policy’s provisions cover the original claim. The insured must assemble all relevant evidence and documents, including copies of all medical records, claim denial feedback, and any communication with the insurer. 

The insured should document all phone calls and any meetings with the insurer. The insured should also record the dates, names of participants, and issues discussed. Proper documentation demonstrates that the claimant followed the due process of filing a bad faith insurance claim. 

Documenting Denial of a Claim

A claimant should safely keep documents and evidence of claim denial. Some unethical insurers may edit the original version of a claim denial to demonstrate that the denial was reasonable. Documenting all interactions with the insurer and its statements concerning the claim denial helps to show proof of bad faith practices.

Appealing a Claim Denial 

Following a claim denial, the claimant can request the insurer to reevaluate the claim and denial. An officer at the insurance company can do this review internally. If the insurer fails to reverse the denial, the claimant can appeal to the Nevada insurance regulatory agency. This state agency is responsible for reviewing contested insurance claims. 

Sometimes insurance companies commit errors, such as a claim miscalculation. A simple internal review may unearth where an error occurred and rectify it. This step eliminates the need to escalate matters further if the insurer identifies and resolves the mistake that led to the claim denial.

Making a Final Demand

If an insurance company still denies the claim after the appeal process, the claimant can then write and send a demand letter to the company. The letter should comprise all the details of the claim. It should capture the accident details, the denied claim, and arguments supporting claim approval. It should also consist of relevant evidence supporting the claim’s credibility and the claimant’s reasons for filing the claim.

The claimant should include a time limit within which the insurer must respond. The average duration is from 15 to 60 days from when the claimant made a final demand for claim payment. The letter should also state the intention of filing a lawsuit if the insurer fails to pay the claim within the provided time limit.

The claimant can file a bad faith claim if the insurer underpays the claim or deliberately delays in processing a legitimate claim. The claimant, however, can only file the lawsuit after the insurer’s allotted response time has lapsed.

Filing a Complaint with the Nevada Department of Insurance

Each state has an insurance department whose mandate is to regulate insurance providers and how they resolve their clients’ claims. The insurance department also licenses insurance providers and agents and regulates insurance contracts and rates. It also reviews insurance company practices. These duties help protect policyholders from unethical behaviors by insurance companies.

A claimant in Nevada can file a complaint with the Nevada Department of Insurance. Upon filing the complaint, the department will commence its investigation immediately. The department can try to resolve the issue through mediation. The claimant can file both a complaint and a lawsuit with the department of insurance. Filing both, however, would lower the odds of the department resolving the conflict through mediation. 

Filing a Bad Faith Insurance Claim

The claimant should file a bad-faith claim only after exhausting all dispute resolution avenues with the insurance company. The claimant must decide where to file the claim. The claimant can file the claim in a state or federal court. The claimant should also choose a forum with authority over the insurance company. 

Working with a Bad Faith Insurance Attorney  

The bad faith claim process can be an uphill task for an unrepresented claimant. A claimant who involves an attorney throughout the entire process of filing a bad-faith lawsuit has a higher chance of success than an unrepresented claimant.

The attorney helps the claimant prove that the insurer denied the claim without a valid reason. The attorney also evaluates evidence collected and identifies instances where the insurance company failed to adhere to the established standards when reviewing or investigating a claim. 

An attorney with a stellar record of handling bad faith insurance cases knows how to fight insurance companies. The attorney knows the dubious tactics that insurance companies use to justify claim denial. An insurance company can, for instance, deny a life insurance claim by misrepresenting relevant coverage conditions to the policyholder. 

In such a situation, a life insurance attorney can investigate the case and gather evidence to prove that the insurer acted in bad faith. The goal is to ensure the policyholder receives compensation under the insurance contract alongside damages for wrongful denial. 

The damages will cover lost earnings, emotional distress, and attorney fees. A jury may also award the claimant punitive damages if it determines that the insurer acted egregiously. These punitive damages punish the insurer for its negligent actions and discourage it from dealing with other policyholders unfairly.