Disability Insurance Bad Faith: Different States – Part 4 (Nevada)
Having outlined the tort law and statutes covering an insurers wrongful claim denial in the states of Arizona, California, and Colorado, we now take a look at the bad faith law of Nevada.
In Nevada, a disability insurance policyholder can bring a lawsuit for bad faith under tort law, or may bring a claim based on the Unfair Claim Practices statute, which was enacted as part of a comprehensive plan to regulate insurance practice in Nevada.
A policyholder can only sue for bad faith under tort law if his or her claim has been denied, but can bring suit under the Unfair Claim Practices statute whether or not the disability insurance claim is denied.
The Statute: Nev. Rev. Stat. § 686A.310
The Rules: Engaging in any of the following activities is considered to be an unfair practice for disability insurers:
- Misrepresenting to insureds or claimants pertinent facts or insurance policy provisions relating to any coverage at issue.
- Failing to acknowledge and act reasonably promptly upon communications with respect to disability claims.
- Failing to adopt and implement reasonable standards for the prompt investigation and processing of disability insurance claims.
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the policyholder.
- Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.
- Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.
- Attempting to settle a disability claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
- Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured, or the representative, agent or broker of the insured.
- Failing, upon payment of a claim, to inform insureds of the coverage under which payment is made.
- Making known to claimants a practice of the insurance company of appealing from arbitration awards in favor of claimants for the purpose of compelling them to accept settlements or compromises less than the amount that was awarded in arbitration.
- Delaying the investigation or payment of claims by requiring a claimant or his or her doctor to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
- Failing to settle claims promptly, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
- Failing to provide a prompt, reasonable explanation of the basis for the denial or settlement offer.
- Advising a claimant not seek a disability insurance attorney.
- Misleading an insured or claimant concerning any applicable statute of limitations.
The Tort Law Standard: An insurer fails to act in good faith and breaches the covenant of good faith and fair dealing when it refuses without proper cause to compensate an insured for a loss covered by the policy.
