The Time Limit to File an Insurance Bad Faith Claim

Submitting a claim to an insurance company might seem straightforward but once you hit “enter” on your submission, there is no telling what might happen. There are also concerns that the insurance company you’re dealing with isn’t honoring the policy. If you suspect that your insurance company has acted unfairly, you may consider filing a bad faith claim.

These claims arise when an insurer unreasonably delays, denies, or underpays a valid claim.

However, even if the insurer clearly acted in bad faith, the window to take legal action is limited. Nevada law sets a specific time frame in which a bad faith lawsuit must be filed. Waiting too long can result in losing the right to recover damages, regardless of how strong the case might be.

Understanding the Legal Deadline

In Nevada, most insurance bad faith claims fall under the umbrella of tort law, and the state applies a two-year statute of limitations for these cases.

This means a claimant generally has two years from the date they knew—or should have known—of the insurer’s wrongful conduct. In other words, the clock usually starts ticking when the insurer issues a final denial, makes an unreasonably low offer, or otherwise signals it will not honor the policy terms.

That two-year window is strictly enforced by the courts. Filing even a day late can result in automatic dismissal of the case.

Courts don’t typically make exceptions unless there are rare and compelling circumstances.

When the Clock Starts Running

Pinpointing the exact date the statute of limitations begins can be complicated. The date isn’t always when the claim was first filed with the insurer.

Instead, the timeline often starts when the insured receives a denial or encounters clear evidence of unreasonable delay. In some cases, the insurer may drag out the process without ever issuing a formal denial. That doesn’t mean the claimant has unlimited time. Courts may rule that a reasonable person should have recognized bad faith once certain actions or patterns emerged.

To avoid missing the deadline, policyholders should seek legal advice as soon as they suspect unfair treatment.

Different Deadlines for Contract vs. Tort Claims

Nevada recognizes both tort-based and contract-based insurance bad faith claims. While the tort version involves unreasonable or malicious conduct, a claim based purely on breach of contract falls under a different rule. Contract claims in Nevada typically carry a six-year statute of limitations.

This longer deadline may apply if the bad faith elements are hard to prove, but the insurer clearly violated policy terms.

However, relying solely on the contract theory can limit the scope of damages. Tort-based bad faith claims may allow recovery for emotional distress, punitive damages, and other compensation not available in simple breach of contract cases.

Exceptions That May Affect the Deadline

Although two years is the standard rule for tort claims, there are certain exceptions.

One potential exception involves the “discovery rule,” which delays the start of the time limit until the date that you knew or reasonably should have known of your insurer’s bad conduct. This rule can be useful if your insurer concealed information or gave you misleading explanations.

However, courts will still assess whether you acted diligently. Another exception may apply if the claimant was legally incapacitated or a minor at the time of the violation. These exceptions are narrow and fact-specific, so relying on them without legal guidance can be risky.

The Importance of Acting Promptly

Delays can weaken a bad-faith case, even if they don’t exceed the statute of limitations. Evidence can become harder to find, memories can fade, and witnesses may be unavailable. Insurance companies often benefit from delays, especially if they can point to a lack of urgency on the claimant’s part.

Acting promptly shows the court that the claimant took the matter seriously and tried to resolve it in good faith. It also allows for a more complete and accurate investigation into the insurer’s conduct.

The sooner a claimant gathers evidence, the stronger their position will be when it’s time to negotiate or file a suit.

Filing a Complaint and Starting the Lawsuit

To preserve the right to sue, you must file a formal complaint in court prior to the deadline. This filing doesn’t mean that you have to present all of your evidence at this time, but you’ll need to outline the key facts and legal grounds.

Once the complaint is filed, the lawsuit is officially underway, and the court will set deadlines for the next steps. Filing in the proper jurisdiction and against the correct parties is essential.

Any misstep during this stage can result in procedural delays or dismissal.

Working with an attorney experienced in bad faith litigation can help avoid technical pitfalls and ensure the claim proceeds efficiently.

Filing an insurance bad faith claim in Nevada involves more than identifying wrongdoing—it requires timely action within a strict legal framework. The two-year statute of limitations for tort-based claims creates urgency for policyholders who believe they’ve been treated unfairly.

While some contract claims may allow more time, they often come with trade-offs in terms of available damages. At the Law Office of Matthew L. Sharp, we understand that knowing when the clock starts and taking steps early can be vital in protecting your legal rights.

If you believe your insurer acted in bad faith, our experienced attorneys can help you assess your options and preserve your ability to pursue a fair outcome.