Nevada has long had an established deceptive trade practices statute that applies to all business entities operating within the state, and now it has been updated to address problems associated with work-around practices that many operations use within their company policy. Insurance is one of the industries that has historically skirted the law by handling claims based on information the company has that a claimant may not. The current upgrade to the Deceptive Trade Practices Act has now made it potentially easier for some claimants to file additional bad faith claims against an unscrupulous insurance provider.
Insurance company legal requirements
There are already specific laws enacted that govern how insurance companies must respond when claims are filed. While they are general with respect to accepting and making decisions on claims, there are still practices they can use that could constitute bad faith. Those actions can include requesting unnecessary documentation, purposely delaying or denying claims, and refusing to pay claims that are obviously valid. Additionally, all insurance companies must respond in a reasonable amount of time and conduct a full investigation into all submitted claims.
What the new law does
The upgrades to the Nevada Deceptive Trade Practices Act could potentially make insurance companies liable for offering a quick low-ball offer to claimants well short of what benefits they could receive. A prime example of insurance bad faith is offering a quick settlement in exchange for a full release for future medical responsibility without making an allowance for general damages for ongoing life issues stemming from the injuries. These are also known as pain-and-suffering damages.
Many insurers in the state have historically used this method of deception in reducing insurance claim payouts as a matter of company policy. A bad faith claim could now exist if it is proven that an insurance company has purposely withheld information that encouraged a claimant to accept an unreasonably low settlement offer.