What is Insurance Bad Faith?

You purchased insurance coverage for protection, peace of mind and security in the event of a loss. You faithfully paid your insurance premiums. You lived up to your end of the bargain. However, when you asked the insurance company to live up to its end of the bargain, it failed to do so.

 

“Insurance Bad Faith Law” are laws designed to protect you against fraudulent insurance practices. Nevada has adopted the Unfair Claims Practices Act which insurance companies in Nevada must follow. Unfortunately, you only have to look at the recent headlines to know that insurance companies sometimes fail to live up to those laws and their obligations. Years after Hurricane Katrina, homeowners are still arguing with their insurance companies for coverage. In fact, U.S. Senator Trent Lott was not even immune. He had to sue his insurer, State Farm, for failing to honor his homeowner’s policy.  If an insurance company will improperly deny the claim of a U.S. Senator, is it any surprise that they will do the same thing to you?

A bad faith insurance case happens when your insurance company unreasonably denies or delays payment of your claim. Your insurance company has an obligation to deal with you fairly and promptly. If your insurance company unreasonably denies your claim, unreasonably delays payment of your claim, or unreasonably undervalues and/or underpaid your claim, it may now owe you for more than just the coverage it originally agreed to in the policy. It may also owe you for the harm and inconvenience it caused you by denying or delaying the payment of your claim. Examples of how an insurance company could commit bad faith include (1) failing to promptly investigate your claim; (2) unjustly delaying payment; (3) unreasonably refusing payment of a claim; (4) unreasonably undervaluing or underpaying your claim; and (5) unreasonably interpreting the policy language against you in order to avoid payment of its full obligations.