Like many other states, Nevada has a law on the books which prohibits insurance carriers, and others, from engaging in certain claim-handling techniques which lawmakers deem unfair.
In many respects, Nevada’s law is much broader than that of other states.
For example, unlike other states, even a single or, at best, a handful of violations can lead to legal penalties. The person complaining about the insurance carrier need not show that the carrier is in the habit of using prohibited claim-settling techniques.
Basically, an insurance company must resolve claims fairly and efficiently. They may not play hard-ball with an insured or take advantage of the company’s superior financial resources. Not doing so, even one time, may lead to a legal issue.
Nevada insureds may sue for damages after a violation of the law
Unlike most other states, Nevada allows a policyholder to sue his or her insurance company for violations. The insured can recover his or her damages if he or she can show that the company’s violation caused those damages.
The insurance company need not have acted maliciously or intentionally.
The protection of this statute does not extend to what are called third-party claimants. An example of a third-party claimant is a car accident victim who files a claim with a negligent driver’s insurance carrier.
However, a third party claimant may arrange with a policyholder for the policyholder to assign any right the policyholder has to pursue a common law bad faith claim. Common law bad faith is still recognized in Nevada courts.
The upshot is that insurance carriers who serve customers in the Las Vegas area are going to want to make sure that they follow the law when their customers make a claim or need coverage. Doing so may involve careful hiring decisions and well-developed procedures which management must consistently enforce.
However, it is also important to remember that insurance carriers do not have to pay all claims and do so without question. Carriers have the right to investigate and deny payment for losses that are not covered, but they may have to defend such choices in court.
