Understanding Bad Faith Insurance Claims

All insurance policyholders should be aware of bad-faith insurance. Bad faith occurs when an insurance company fails to fulfill its obligations to policyholders, such as denying valid claims or delaying settlements. Victims of bad-faith insurance practices can take legal action against the insurance company by filing a bad-faith insurance claim.

Nevada has some of the strongest protections for consumers’ rights against insurance companies in the United States. NRS 686A.310 requires insurance companies protect their insureds; And if the insured sufferers losses, the insurance companies must pay those damages directly to the consumer/insured (NRS 686A.310(2).  

At the Cottle Firm, our Las Vegas bad faith insurance claim lawyers help our clients seek damages from insurance providers who have failed to honor the terms of their contracts with policyholders. If you have recently become a victim of bad faith insurance, you can learn more about your legal options by contacting the Cottle Firm at 702-722-6111.

Common Examples of Bad Faith Insurance

An insurance company is guilty of bad faith if it fails to adhere to the terms of a policy if it fails to adhere to the terms of a policy with one of its clients. Bad faith insurance claims generally fall into one of two categories; either failing to pay out a legitimate claim or failing to investigate and pay a claim within a reasonable amount of time.

Denying Valid Claims Without Reasonable Justification

Insurance companies sometimes deny valid claims without proper investigation or justification. For example, a homeowner’s insurance company might deny a roof damage claim despite clear evidence of a covered peril, such as a major storm. In such cases, the insurer would be guilty of acting in bad faith by unreasonably denying or delaying payment.

Delaying or Prolonging the Claims Process

Unreasonably delaying the processing of claims is another common example of bad-faith insurance practices. Insurers have a legal duty to handle claims promptly and fairly, but some intentionally drag out the process to discourage policyholders or force them into accepting low settlement offers. For instance, an auto insurance company might delay approving medical treatment coverage for a policyholder who was injured in a car accident.

Undervaluing or Underpaying Claims

In addition to outright denials and delays, insurers sometimes attempt to undervalue or underpay claims to minimize their financial liability. This can occur in various types of insurance claims, such as property damage, personal injury, and medical expenses. For example, an insurance company may offer a settlement far below the actual cost of repairs or medical treatment, leaving the policyholder unable to fully recover from their losses.

Misrepresenting Policy Terms or Coverage 

Insurance companies sometimes misrepresent policy terms and coverage details to policyholders. This may involve providing incomplete or misleading information about what is covered under the policy or the terms and conditions associated with the coverage. This typically occurs when someone is setting up a policy, not when making a claim.

For example, an insurer might fail to disclose certain exclusions or limitations buried in the fine print of the policy documents. This can mislead policyholders into believing that they have broader coverage than they actually do. Such deceptive practices can result in policyholders facing unexpected denials of valid claims or receiving inadequate compensation for their losses.

Policyholders should carefully review their insurance policies and seek clarification on any unclear terms or conditions to avoid falling victim to misrepresentation tactics by insurance companies.

Impact of Bad Faith Insurance on Policyholders

Bad faith insurance practices can have major consequences for policyholders beyond the immediate denial or delay of claims.

Financial Hardship

Bad faith insurance practices often lead to financial hardship. When insurance companies unjustly underpay, deny, or delay valid claims, policyholders may struggle to cover medical expenses, property damage repair costs, and other losses for which they thought they were protected. This financial strain can create significant challenges for individuals and families already facing difficult circumstances.

Emotional Distress

Dealing with bad-faith insurance practices can be extremely stressful for policyholders. Not receiving the benefits you need can exacerbate existing stressors. In addition, this experience can lead to frustration and a sense of betrayal. This can take a major toll on a policyholder’s emotional well-being and may cause anxiety, depression, frustration, and feelings of helplessness.

Legal Battles and Lengthy Disputes

Policyholders who believe they have been treated unfairly by their insurance companies may find themselves embroiled in legal battles and lengthy disputes to seek the compensation they deserve. Pursuing a bad faith insurance claim often requires participation in complex legal proceedings, which can be time-consuming, emotionally draining, and financially burdensome.

Policyholders may need to hire a bad-faith insurance claim lawyer for legal guidance while challenging insurance companies. This adds additional expenses to their already strained finances. Protracted disputes with insurance companies can also prolong the resolution of claims and exacerbate both financial and emotional distress.

Steps to Take if You Suspect Bad Faith Insurance Practices

If you believe that your insurance company is engaging in bad-faith insurance practices, here are some crucial steps that can protect your rights and help you seek justice:

  • Document Everything: Keep records of all communication with your insurance company, including emails, letters, and phone calls. Note dates, times, and the names of the representatives you speak with.
  • Review Your Policy: Thoroughly examine your insurance policy to understand your coverage and rights. Pay close attention to any clauses or provisions that apply to your situation.
  • Gather Evidence: Collect any evidence that supports your claim, such as photos, videos, medical records, and witness statements. This evidence can be used to prove bad faith on the part of your insurance company.
  • Seek Legal Advice: Consult with an experienced Las Vegas bad faith insurance claim attorney. They can provide guidance on your legal rights and options, as well as represent you in negotiations with the insurance company and legal proceedings.
  • File a Complaint: Consider filing a complaint with the Nevada Division of Insurance. They can investigate your claim and take appropriate action if wrongdoing is found.

Learn More From Our Las Vegas Bad Faith Insurance Claim Lawyers

Has your insurance claim been denied or delayed after you suffered a serious injury? No one should have to struggle to secure the benefits they are rightly entitled to under their insurance policy. If you believe you have been a victim of bad faith insurance practices, the dedicated Las Vegas bad faith insurance lawyers at the Cottle Firm are here to help you seek the compensation you deserve. Contact us today at 702-722-6111 to discuss your case in a free consultation.