Requirements Insurance Companies Must Adhere to [infographic]

Nevada law prohibits insurance companies from engaging in unfair practices that are designed to deny coverage for legitimate claims. Companies that violate Nevada law in this regard may be held liable for damages including interest, the cost of the claim, attorney’s fees, and other expenses stemming from the denial of coverage.

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Insurance Company Requirements_bad faith insurance lawyer reno_infographic

Unfair Claims Settlement Practices Act

The Unfair Claims Settlement Practices Act prohibits insurance companies from taking actions to unduly deny coverage to an insured party. These include:

Misrepresenting Pertinent Policy Facts or Provisions – Representatives for the insurance company may not deliberately misinterpret or refuse to explain policy coverage to an insured client or claimant with the intent of getting them to drop their claim for coverage. Additionally, insurance companies may not mislead clients or misrepresent applicable statutes of limitations regarding the claim.

Failure to Acknowledge – An insurer is required to respond promptly to any claims made against a policy. In some situations, insurer’s will claim the paperwork is “lost in the mail” in order to delay the payment of a claim. In a worst case, they may fail to acknowledge the claim until after the statute of limitations within the policy has elapsed.

Failing to Adopt Reasonable Standards for Investigation – Insurance companies are required to thoroughly investigate the pertinent facts of any claim. Common examples of insurance companies failing to do this include not collecting witness statements, not reviewing police reports, and not documenting property damage with photographs or video.

Failing to Affirm or Deny Coverage – Insurance companies are required to respond promptly once an insured party has submitted the required and requested documentation and evidence. It is sometimes the case that insurance companies will mark a case as “pending review” and sit on it long after the claim should have been paid.

Failing to Offer Prompt, Fair, and Equitable Settlement – When liability is clear, insurance companies are required to provide adequate and reasonable coverage that is in line with the terms and conditions within the policy. For example, if an individual’s $1 million property coverage is clear and they suffer $1 million in documented property damage, it is not fair and equitable for the insurance company to offer them a low-ball settlement of $100,000.

Forcing Insured Party’s to Initiate Litigation – Insurance companies are not allowed to compel an insured party to pursue litigation in order to recover claims. In such a scenario, the insurance company gambles that the insured party won’t be able to secure representation from a bad faith insurance lawyer in Reno to help them recover the funds that are owed. Moreover, insurance companies are prohibited from advising or coercing individuals not to pursue legal counsel.

Altering Insurance Policy or Claims Information – It is unlawful for an insurance company to alter an application for insurance coverage, policy information, or a claim without the consent of the insured party. In some cases, the insurance company may obtain this consent from the insured’s insurance agent or broker, but in all cases, the individual must be notified of the alterations that have been made.

Failing to Notify Beneficiaries – Insurance companies are required to inform the insured party or their beneficiaries when a payment for a claim is made. Moreover, they are required to identify what coverage the payment is paid for. This is important because many insurance policies offer payments for different forms of coverage, for example, death and property damage. If an individual dies in a car accident, they would be entitled to the value of the vehicle in addition to any life insurance they might carry with the company. Shady insurer’s who don’t identify what the check is for do so in the hopes that the insured party or their beneficiaries won’t notice the slight.

Failing to Provide Timely Explanation of a Claims Decision – Insurance companies are required to provide a reasonable and timely explanation supporting their claims decision. This applies whether the insurance company opts to deny the claim, offers to settle, or compromises on the claim.

Pursuing Bad Faith Insurance Claims

An insurance policy is a legally binding contract. When a company breaches that contract, the insured party may pursue a claim against the company. In Nevada, there is no statute of limitation on bad faith claims and they may be filed at any time.

In order to establish a bad faith claim, the individual must be able to show that they had an insurance contract and that the individual was in good standing with the company, i.e., the premiums were paid and the insured party was not violating terms of the policy. It is also crucial to show that the claim was covered by the terms of the policy. Once these are established, it is incumbent upon the claimant to show that the insurer acted in bad faith when discharging the claim and that this willful behavior caused further injury to the beneficiary.