If you have had a benefit claim denied following a workplace accident in Nevada, you may find it helpful to know how to prove bad faith insurance in workers’ compensation. After your injury, you file a workers’ compensation claim with the insurance company. You expect an honest, fair, and good faith negotiation during the claim settlement process. However, the insurer resorts to unfair tactics in order to unreasonably delay or deny your legitimate workers’ compensation claim.
When you believe that an insurance company is acting unethically, you’re unlikely to know how to prove bad faith insurance in workers’ compensation. Contact an experienced Reno bad faith attorney to obtain the compensation you deserve in a timely manner.
What Is Bad Faith Insurance in Workers’ Compensation?
Bad faith is a term that is used when an insurance company improperly denies a claim without a reasonable basis or refuses to offer a settlement consistent with claims of a similar nature without a reasonable explanation. It is also used when an insurance provider unjustly delays for so long that it amounts to a denial. Insurance companies are legally obligated to grant you full workers’ compensation benefits per your policy or provide adequate reasoning (in writing) as to why your claim is denied. In either case, it’s legally obligated to investigate your claim as quickly as possible. There are numerous signs to look out for that are present in many bad faith insurance disputes.
Signs of Bad Faith Workers’ Compensation Insurance Claims
1. Unjust Denial of Your Claim
One of the most obvious signs that an insurance company is acting in bad faith is denying your claim without providing you with a reasonable explanation. If the company has a valid reason to deny your claim, it should explain why in detail. If the insurance company continues to give you vague or incomplete answers or blames you for the accident, it may be acting in bad faith.
2. A Quick, Low Offer
Insurance company adjusters are aware of the time-sensitive nature of workers’ compensation claims. You may have mounting medical bills, no way to earn money, and a pressing need for cash flow. Some adjusters exploit this as leverage and present you with a quick, but unfairly low, settlement offer. The hopes are often that you will take it without doing your own research or consulting with an experienced Reno personal injury lawyer. If you accept a preliminary low settlement offer, you may not get enough compensation to cover your medical expenses and lost wages. Lowball offers are sometimes a sign of an insurer acting in bad faith.
3. Lack of Communication
Another red flag indicating that your insurance provider may be acting in bad faith is a lack of communication. If your insurance company representative fails to respond to a claim or an inquiry about it within 24 hours, the insurer may be attempting to avoid dealing with your claim. The longer the company waits to pay out your claim, the more money it makes off of the premiums you’ve already paid. This can be an infuriating experience, especially if you are trying to determine the status of your claim or when, approximately, you can expect to receive benefits.
Threatening claimants is one of the most unethical tactics insurance companies employ. These threats may be made if you merely try to reach a reasonable settlement or if you consider retaining legal counsel. These often empty threats are made to coerce claimants into taking lowball offers. Insurance providers are required to conduct themselves professionally toward all parties, not to make blatant or veiled threats. If the insurance company has threatened you with negative consequences, it is likely acting in bad faith.
5. Taking Too Long to Investigate Your Claim / Inadequate Investigation
An insurance provider acting in good faith will begin a timely and thorough inquiry of your claim after receiving it. If it takes the company more than a few weeks to investigate your claim, it might be doing so in an effort to delay or reject your claim. In some cases, the insurance company will ask for additional information that’s not relevant before investigating your claim as a delaying tactic. This occurs frequently when the insurance provider knows you have neither the time nor the resources to respond. Investigations must be carried out promptly and thoroughly. If the insurer is not interviewing all relevant witnesses, or fully examining crucial evidence, it may be acting in bad faith.
6. Unreasonable Documentation Requests
If the insurance company requests excessive documentation, including evidence unrelated to the claim, it might be a bad faith effort to drag out the process. Only information that is pertinent to your case and required to evaluate your eligibility for benefits should be requested by the insurer. When using this tactic, it may be hoping you will get frustrated and give up on your claim, or it may deny your claim if you are unable to supply the documents requested.
You should be aware of additional methods of how insurance companies act in bad faith. One of the most common is a claims adjuster calling you after the work injury under the false pretense of seeing how you are doing. He or she will eventually get to the real agenda, which could be talking you out of seeing a doctor or contacting a lawyer, gathering additional information for the compensation claim, or intimidating or deceiving you into settling for a lowball amount.
Why Do Insurance Companies Act in Bad Faith?
Policyholders must keep in mind that insurance companies exist to make money and protect their profits. They make money by collecting insurance premiums, and their profits decrease when claims are paid out. The most effective way in which insurance companies protect their profit margins is to avoid paying out on claims whenever possible. Paying you immediately after an accident isn’t always in their best financial interests. They frequently use deceptive and manipulative negotiating tactics to minimize your eventual payout.
Proving Insurance Bad Faith in Workers’ Compensation Claims
Due to the fact that contract law and personal injury law are both involved, knowing how to prove insurance bad faith in Nevada can be challenging. In order to establish the insurance company’s bad faith, you must demonstrate that your claim is a covered loss under the insurance policy, that the insurance company is required to pay under the terms of the insurance contract (which, in Nevada, contains an implied covenant of good faith and fair dealing), and that the insurance company acted in bad faith.
The insurance company’s legal team may initially assert that your claim is not covered by the insurance policy or that the insurer is not required to pay under the terms of the policy. If and when it is determined that your claim is covered and that the insurer has a duty to pay, an experienced Reno insurance bad faith lawyer will explore two avenues to prove bad faith.
Your lawyer will advise you to save all copies of your correspondence, keep track of the dates and times of your phone calls with the insurance company’s adjusters, make notes during the calls, and maintain thorough records of any claim adjuster activity, including a description of the adjuster’s actions and the dates they took place. Your lawyer will also help you collect all medical records, receipts, and estimated costs to show the extent of your injuries. He or she will then conduct formal discovery and gather records from the insurance company, such as:
- recorded communications with the insurer
- correspondence from the insurer that may show misconduct
- the insurer’s internal communications
- the original insurance contract
- any other relevant documentation
The documentation can reveal the history of the insurance company’s investigation. Your lawyer may also conduct interviews and formal depositions of insurance representatives in order to demonstrate to a potential jury how the insurance company handled (or mishandled) your claim.
Pattern of Bad Faith
A skilled Reno insurance bad faith attorney will also investigate the formal and informal policies and previous actions of the insurer. He or she will attempt to establish a pattern of bad faith on the part of the insurance provider. If it can be proven that an insurance company’s policies encourage denying workers’ compensation claims or that such claims are regularly handled improperly, you will have a greater chance of prevailing in court or receiving a fair settlement.
Damages Available in Litigation
Should a Nevada bad faith insurance claim go to court, the policyholder can be awarded two different types of compensation – compensatory damages and punitive damages.
When you prevail in a bad faith insurance lawsuit, you should hope to recover the actual losses you incurred as a result of the denial. Compensatory damages are frequently the amount of money the insurer should have paid out in the first place (or the difference between that figure and the amount already paid), attorney’s fees, out-of-pocket expenses related to the insurer’s bad faith acts, and, in some cases, damages for emotional distress.
Punitive damages are sometimes awarded against an insurance company under Nevada’s bad faith insurance law if it can be demonstrated that the insurer acted with fraud, malice, or oppression in causing your injury. These penalties are intended to punish the wrongdoer for acting in bad faith and to deter similar behavior in the future. Such damages frequently far outweigh the actual economic losses. Punitive damages in Nevada are normally limited to three times the amount of actual losses. The law, however, expressly excludes bad faith insurance claims from this cap.
Bad Faith Insurance Claims FAQs
How long does an insurance company have to settle a claim in Nevada?
Once an insurance company receives notice of a claim, it has 80 working days to settle a claim. The specific timeline is:
- Twenty (20) working days to acknowledge the claim, notify the policyholder, and send instructions and paperwork. Proof-of-loss forms, which serve as a sworn statement from the policyholder about the extent of the damage or injuries, are part of that documentation
- Thirty (30) working days, upon receipt of the proof-of-loss forms, to investigate the claim and decide whether to accept or deny it
- Thirty (30) working days after the final payment is approved to make that payment
If the insurer requires more time to investigate a claim, it may grant 30-day extensions as long as the policyholder is notified of the delay. Some instances, such as claims involving severe or multiple injuries, can increase the time it takes for an insurance provider to settle a claim.
How long do I have in Nevada to sue the insurer?
According to Nevada law, policyholders have a four-year statute of limitations in which to bring a bad faith claim against an insurer. That clock starts running immediately after the insurer’s bad faith action.
Who has the right to sue for insurance bad faith?
If an insured party is entitled to benefits under an insurance policy and those benefits are wrongfully withheld, the insured can generally sue for bad faith. This includes both the insured parties and others who are entitled to benefits under the policy as additional insureds or express beneficiaries. A person who is not a party to the contract has no legal standing to sue.
Who may be sued for insurance bad faith?
In most cases, you can only sue the insurers who are the contracting parties to the policy. This includes insurers classified as primary, excess, and umbrella. In addition, you can sue an insurer’s joint venture partner or alter ego, generally a parent company. In certain circumstances, it is also possible to sue a managing general agent appointed by the insurance provider to manage all or part of its insurance business when determining how to prove bad faith insurance in workers’ compensation.