When an insurance company violates its duties to act in good faith, an insured policy holder can file a bad faith insurance claim against the company. The plaintiff must prove legally that the insurance company acted in bad faith.
What is a Bad Faith Insurance Claim?
When an insurance company breaches its duty to provide a fair assessment of policy benefits, it acts in bad faith. If the insurance company denies a claimant’s benefits for no apparent or good reason, the Nevada Supreme Court allows the claimant to file a claim or lawsuit against the insurance company. The law recognizes bad faith first-party claims but not third-party claims because they do not have contractual relationships with the insurance company. To win a bad faith lawsuit, a plaintiff must prove in court that the insurance company deliberately acted in bad faith when denying a claim.
Proving a Bad Faith Claim
If an insured plaintiff files a lawsuit, he/she must prove the claim in court according to Nevada insurance laws. The fact that an insurance company denies policy benefits or fails to pay benefits is not enough. A plaintiff must prove that there was no reasonable basis for the claim denial and/or that the insurance company acted in reckless disregard when reviewing the claim. If the insurance company disputes the value of the claim, makes an error in the claim valuation, or if parties disagree about the value of the claim, that does not constitute bad faith. To prove bad faith, a plaintiff must show proof for the following:
- The insurance company denied or refused to pay the insured’s claim per policy benefits
- The insurance company had no reasonable basis to deny the claim or payment
- The insurance company knew that there was no reasonable basis for the claim denial
In Nevada, it is well established that every contract imposes the duty of good faith and fair dealing upon the contracting parties but proving a bad faith insurance claim can be a complex process. Finding an insurance lawyer near you is important for gathering the necessary evidence needed for proof in a Nevada court. If a plaintiff wins a Nevada bad faith lawsuit, damages are not limited to actual losses suffered by the plaintiff. Punitive damages can also be awarded as punishment for the insurance company and deterrent to other insurers from acting in bad faith.