What Types of Insurance Can Involve Bad Faith?
An insurance policy is a product in much the same way as a blender is a product. You pay for the policy and expect something in return, but unlike the appliance, you might wait for years before you actually get to utilize the benefits of an insurance policy.
When an unfortunate incident leads to a claim, the last thing you want to deal with is an insurance company acting in bad faith.
What types of insurance can involve bad faith? The short answer: All of them.
Thankfully, there is a remedy available for when an insurance company acts in bad faith.
That involves getting support from an experienced Reno insurance bad faith lawyer and filing a complaint with the Nevada Division of Insurance. First, you need to fully understand what is considered insurance bad faith versus standard operating procedures.
The Legal Definition of Insurance Bad Faith
In Nevada, the legal definition of insurance bad faith is “a breach of the implied covenant of good faith and fair dealing in an insurance contract.” That’s a fancy way of saying the insurance company is not holding up their end of the policy they issued.
The risk of bad faith actions is such a serious issue that the state created the Nevada Insurance Code to provide specific rules on how an insurance carrier should operate.
You can recognize the signs of bad faith insurance if the company engages in any of the following practices:
- Unreasonable delay in responding to your claim or follow-ups
- Unexplained denial of a legitimate claim
- Failure to thoroughly investigate
- Misrepresentation of policy terms
- Unreasonable interpretation of policy language
- Unfair settlement offers
Consider this scenario: Your insurer waits the entire 20 days allowed by law before they acknowledge that you submitted your claim. After a week, they return with a denial without any explanation, or they offer you a quick settlement that doesn’t take into account the full extent of your damages.
That would be just one example where you could make a claim against the company for acting in bad faith.
Bad Faith in Automobile and Trucking Insurance
Bad faith insurance tactics often pop up in accidents involving vehicles. Whether that is a crash between two drivers or a driver and a truck, it often means the at-fault party’s insurance carrier will be paying for the compensation.
In order to avoid that payout, the insurance carrier might accept the policyholder’s version of events despite the evidence. That could lead to an inadequate investigation where the insurance carrier relies on an expert witness who works for them to provide an opinion on why their customer is not at fault.
Even though the expert witness could be incorrect, the insurance company can deny the claim and default to the idea that they are just “following the findings.”
Trucking companies can also be named as at-fault parties if their hiring practices, operations, or fleet maintenance contributed to the accident. The addition of a trucking company entails additional investigations and document requests. That can slow down your claim to the point that you’re so frustrated you’re willing to give it all up.
That’s what the insurance companies would like to happen, but you can’t give them that satisfaction.
Health and Disability Insurance Coverage Disputes
Health insurers are notorious for denying claims. Those denials often come when a patient is waiting for the approval to go ahead with a doctor-recommended procedure. Disputes often arise over whether the treatment you’re asking for is medically necessary.
Without the approval, the patient would be forced to pay for the full amount of the treatment. That can quickly lead to bankruptcy.
These disputes get further complicated when they involve disability insurance.
Many employer-provided long-term disability insurance policies fall under the regulations established by the federal Employee Retirement Income Security Act (ERISA). Now your claim must be in compliance with state and federal regulations. That can become complex if you try to navigate through the rules without the help of an attorney who specializes in this area.
If you find yourself in a dispute related to a health or disability claim, you are entitled to the following:
- Written explanation of the denial
- Internal appeal with the insurance carrier
- External review by an independent third party
- File a complaint with the Nevada Division of Insurance
Filing a complaint puts the insurance company on notice and could lead to fines, but that won’t automatically mean you can get what you are due. For that, you might need to file a civil lawsuit and take the insurance company to court.
That might sound like an intimidating prospect, and it’s another example of a potential bad faith outcome.
If you’re hesitant to file a lawsuit, then the insurance company can walk away without paying your claim. That is why you need a fierce legal advocate in your corner to protect your rights and hold the insurance company accountable.
Property and Homeowners Insurance Claim Denials
A recent law has allowed Nevada insurance carriers to exclude wildfire coverage from standard homeowners policies. That means if a homeowner wants protection for wildfires, they will need to get a separate policy.
That is not the only potential issue facing homeowners as they navigate through the insurance claims process. This is another area where insurance carriers can issue a claim denial for the following reasons:
Excluded Perils
If your home was damaged by an event that wasn’t covered by the specifics in your policy, then you could be denied reimbursement. For instance, in a rainstorm, you might be covered for wind damage to your roof but not flood damage to your basement, even though it was the same storm.
Lack of Documentation
It is vital to document all of the damage to your home or property. It is equally important for the insurance adjuster to inspect the damage in person. That’s why you never want to throw away a scorched item until the adjuster has seen it.
You also need to provide as much documentation as possible about when you purchased the item and for how much. Without that evidence, you could be denied reimbursement.
Homeowner Negligence
When a home is damaged by a fire, the insurance company will investigate to determine the cause. If it can be proven that your negligence was a contributing factor, there could be a denial.
For instance, if you were storing flammable liquids improperly or didn’t clear vegetation from your surroundings, that could be seen as negligent.
Missed Deadlines
Your insurance policy will undoubtedly include strict filing deadlines as clauses.
Missing those deadlines even by a single day allows the insurance company to deny the claim.
If your home or property claim is denied, you are still entitled to seek an appeal. The Nevada Insurance Code prevents insurance companies from issuing unreasonable denials. It might fall to a jury to determine what is unreasonable.
Frequently Asked Questions About Insurance Bad Faith
Can any type of insurance policy involve bad faith?
Yes, virtually any valid insurance contract in Nevada includes an implied duty of good faith and fair dealing. Whether it is a personal auto policy, a complex commercial liability plan, or a life insurance policy, the insurer is legally required to handle claims reasonably and promptly.
Is a simple disagreement over a claim amount considered bad faith?
Not necessarily. Bad faith requires more than a mere dispute; it involves the insurer acting unreasonably or without proper cause. If the company ignores evidence, fails to investigate, or offers a settlement far below the documented value without explanation, it may cross the line into bad faith.
What is the difference between first-party and third-party bad faith?
First-party bad faith occurs when your own insurance company refuses to pay your claim without a valid reason. Third-party bad faith occurs when an insurance company fails to settle a claim against you by another person, potentially exposing you to a judgment that exceeds your policy limits.
How a Bad Faith Insurance Attorney Supports Your Claim
Accepting a lowball offer from an insurance company will effectively settle your claim.
Once you sign off, you won’t be able to seek any further damages. That is why the offer needs to be right. When an insurance company refuses to budge off that lowball offer, it could be one of the many signs of bad faith.
The Law Office of Matthew L. Sharp has helped many clients take on the major insurance companies in pursuit of justice. When we take on a bad faith claim case, we will be asking for compensation from the original claim as well as additional damages for pain and suffering that the delay or denials caused you.
As an experienced insurance bad faith law firm, we recognize all the tactics and know the right evidence needed to defeat the assertions. We’ll also engage in aggressive negotiations to secure the maximum benefits you’re entitled to. We’ll never be intimidated or back down.
Don’t let an insurance company get away with bad faith practices. Call to set up a free case review, and let’s discuss your options.
