What Happens After You File an Insurance Bad Faith Claim?
An insurance policy is a contract between you and the insurance carrier that obligates them to reimburse you for any losses covered by the policy. It is just that simple.
Unfortunately, in their quest to boost their bottom line, many insurance companies will attempt to hold onto the payment as long as possible or deny the claim outright in the hopes that you’ll get frustrated and give up.
If that happens, it can be an example of insurance bad faith. When proven, an insurance bad faith claim can hold the insurance company accountable and increase your compensation.
So what happens after you file an insurance bad faith claim?
It compels the insurance company to provide a response. If that claim is made as the result of a civil complaint, that response will have to be filed in the appropriate court. That all sets into motion a potential trial and resolution. In order to prevail, you’ll benefit from the support and guidance of an experienced insurance bad faith attorney in Reno.
Before the end result, it is important to understand the different phases that you’ll go through in pursuit of accountability.
Initial Review and the Insurance Company Response
Whenever you file any type of accident claim, the clock starts running for the insurance company. The rules from the Nevada Division of Insurance are as follows:
Processing and Payment Deadlines
- 21 calendar days to approve or deny a claim submitted electronically.
- 30 calendar days to approve or deny a claim submitted by mail or other non-electronic means.
- Payment time frame and approval time frame overlap: approved claims must be paid within the applicable 21- or 30-day period after the claim was received.
Requests for Additional Information
- Insurers and third-party administrators must request the required additional information within 20 working days of receiving the claim.
- After receiving additional information, insurers and third-party administrators must reprocess the claim and pay within 21 days (electronic) or 30 days (non-electronic).
Where examples of potential bad faith come into play if the insurance company requests documentation for information that was already provided. If so, they need to provide a legitimate reason.
Requirements When Denying a Claim
Claims may not be denied without a reasonable basis. If a denial is issued, it has to be within 21 calendar days for electronic submissions or 30 calendar days for paper/non-electronic submissions after receipt of all required information.
A denial notice must also include the following:
- A clear explanation of the denial reason.
- The criteria for which a claim was denied, and how the criteria were applied.
- Appeal or dispute resolution instructions.
If the insurance carrier operates outside these rules, it could be considered bad faith. That is when you want to involve a skilled attorney.
The Discovery Phase and Exchange of Evidence
After the claim has been filed and the insurance company has been put on notice.
That means they will start to build their defense. It is rare that they would ever openly admit to a bad faith practice because of the exposure that would cause. As the complaint moves forward, you enter into the discovery phase and exchange of evidence.
Here’s what is included in that exchange:
Your Claims File
This is obviously the most critical piece of evidence. It will be the complete and unredacted claims file. That should include all adjuster notices, emails, and internal communications related to the claim.
Interrogatories and Requests for Production
Your attorney can request interrogatories that detail the insurance company’s method of operation. These can include training materials, claim-handling guidelines, and compensation structures for adjusters.
These materials may prove that denying claims was encouraged.
Depositions
Depositions are the sworn testimony taken from insurance adjusters, supervisors, and managers to determine why the claim was denied. You might also be called on to provide a deposition that will detail your experience.
Expert Witnesses
An expert witness in an insurance bad faith claim can testify about industry practices. They can provide the foundation to explain how the claims process is supposed to work versus how your insurance claim was handled.
Additionally, your attorney can request the following types of evidence:
- Internal Communications
- Prior Similar Claims
- Financial Records
All of the collected evidence is in service of your claim. Your attorney will be responsible for maintaining the evidence and ensuring that all the relevant information is accessible.
Pretrial Motions and the Possibility of Summary Judgment
Before a trial gets underway, attorneys will submit pretrial motions that can involve the inclusion or exclusion of evidence, a change of venue, a continuance, or a severance, which would separate charges from multiple defendants.
The judge’s rulings on those motions will help form the strategy for your case. Your attorney or the defendant’s attorney might ask for a summary judgment.
This is when the judge would issue a verdict without proceeding with the trial. These are extremely rare to come by and only happen when there is no genuine issue of material fact.
Since the insurance company is likely to dispute your material facts, chances are they can make a persuasive argument to proceed with the trial, even though that might not seem to be in their best interest. At least in a trial, they can present their defense.
The Settlement Negotiation and Mediation Process
There is a path to avoid the filing of a civil complaint. You and your insurance bad faith attorney could enter into settlement negotiations. That would happen after you send a demand letter that spells out your claim and details the instances of bad faith.
The insurance company will have 60 days to respond to the demand letter. They might prefer to enter into mediation to settle the dispute.
The mediation process prevents the issue from becoming a matter of the public record.
It can also lead to a much faster resolution and one that both sides will sign off on. If no agreement is reached during mediation, the next option is to proceed to litigation.
Trial Proceedings for Bad Faith Litigation
When you encounter an insurance company that engages in bad faith practices, you have the option to file a civil complaint and take that company to court. The moment you file your complaint, you will be assigned a judge who will schedule the trial, rule on the pre-trial motions, and preside over the actual case. If a settlement is reached at any point during the pre-trial or trial, the judge must approve the agreement.
Bottom line: Once you file in court, the matter will be resolved by the court. The trial proceedings for bad faith litigation follow the same stages as any other trial.
Those stages are as follows:
- Jury Selection
- Opening Statements
- Presentation of Evidence
- Cross-Examination
- Closing Arguments
Your bad faith attorney will have worked out a strategy that will utilize all of the relevant evidence and witness testimony to convince the jury that the insurance company acted wrongly. It’s important to remember that in a civil trial, the defendant can be found guilty by a preponderance of the evidence, rather than beyond a reasonable doubt, which is the standard in a criminal trial.
In a civil trial, a jury is also entitled to punitive damages. This would be additional compensation awarded to you, designed to send a message to the defendant that their behavior is unacceptable and that there is a price for it.
Nevada law dictates a punitive damages cap of no more than three times the amount of your compensatory damages. For example, if you are owed $50,000 from the original claim, the punitive damages added to your final settlement could be $150,000 for a total of $200,000.
Frequently Asked Questions About Bad Faith Claims
How long does a bad faith insurance lawsuit take?
The timeline for a bad faith claim can range from several months to over two years, depending on the complexity of the case. Factors such as the volume of discovery evidence, the court’s schedule, and the willingness of the insurer to negotiate a fair settlement significantly impact the duration.
Will I have to testify in court for my bad faith claim?
While most bad faith cases settle before reaching a courtroom, you will likely need to participate in a deposition. During this process, the insurance company’s attorneys will ask you questions under oath about your claim and the damages you suffered, which serves as your formal testimony.
What kind of compensation can I get after filing?
Successful bad faith claims can result in the original contract benefits plus ‘consequential damages’ for emotional distress and financial losses. In cases of extreme misconduct, a court may also award punitive damages intended to punish the insurer and deter future bad behavior.
Why You Need an Insurance Bad Faith Attorney
Taking on a major insurance company worth billions might seem like a daunting task, with little hope of prevailing. The truth is that when you have strong evidence on your side and the support of a skilled Reno insurance bad faith attorney, you can reach a positive outcome.
The Law Office of Matthew L. Sharp has worked tirelessly on behalf of our clients to pursue accountability. Our growing list of positive results demonstrates that we don’t back down.
We bring our extensive legal knowledge and years of experience in negotiation and litigation to every case. We are dedicated to leveling the playing field and ensuring our clients can access the maximum benefits they’re entitled to.
If you think that an insurance company has acted in bad faith, we should discuss what happened.
You can schedule a free case review with our office today. This is the best approach to determine if your claim has merit and if you should move forward with a civil complaint.
