When insurance companies and policyholders disagree about claims, the genuine dispute doctrine can define the boundaries of good faith. It acknowledges that insurance companies can make faulty claim decisions without acting in bad faith as long as they follow proper procedures and maintain reasonable positions.
What makes a dispute “genuine”?
The dispute must come from honest doubts about the facts or policy terms—not from hidden or misleading information. To prove that their decision was from a genuine dispute, insurance companies need to prove they have provided:
- Complete and timely claim investigations: Insurance companies must thoroughly examine all aspects of a claim within set time limits. Under Nevada law, they must respond to claims within 20 working days and finish looking into them within 30 days, unless they need more time.
- Clear disclosure of all important policy provisions: Companies must give policyholders copies of all parts of their policy that apply. They must also explain how these rules affected their claim decision.
- Direct updates about claim decisions and reasoning: They must provide policyholders with written explanations for denied claims. It should cite specific terms or exclusions in the policy.
- Detailed documentation throughout the claims process: Companies must keep proper records of every step, from the first report to the final decision. This creates a clear history of how the company made its decision and supports the legitimacy of the dispute.
- Fair evaluation of all available information: Insurance companies must look at all evidence fairly, including facts that may not support their view. This shows they have an unbiased approach in how they review claims.
Take note that the doctrine does not always shield insurance companies from bad faith claims. It only applies when insurance companies fulfill their main obligations: look into claims properly, communicate clearly with customers and keep detailed records.
Protect your interests
Facing bad-faith claims and coverage disputes? An attorney can assess your situation and guide you through the dispute resolution process.