Q: What is the insurance company’s duty to indemnify?
In Nevada, an insurance company’s “duty to indemnify” means that they have the obligation to pay damages caused by the people who have purchased insurance policies from the company.
For example, let’s say you run a red light and hit another car, but the insurance company won’t pay for the damages you’ve caused to the other party.
You need the money to pay those types of damages and it’s the reason you bought the insurance in the first place. People rely on their insurance company. You may pay your premium for years or decades without suffering a loss, but when you do suffer a loss, you expect the insurance company to protect your interests and indemnify you for the damages you caused.
Q: What is the insurance company’s duty to defend?
Let’s say again that you run a red light and injure another motorist. The individual sues you, and under the terms of the policy, the insurance company has promised to defend you in the lawsuit. This means that the insurer has promised to hire a competent attorney to represent you and that the attorney doesn’t have a conflict of interest – that is to say, isn’t putting the interests of the insurance company ahead of your interest. They are going to fight for you.
The insurance company’s duty is to defend runs to the individual policyholder, not the insurance company itself. For example, if the minimum limit covering an injury is $25,000 and the other side wants to settle for $25,000, and the damages are pretty significant to the insurance company, the attorney should recommend settling the dispute for the amount of $25,000.
It’s common, however, for attorneys to put the interests of the insurance company ahead of those of the individual. The insurance company’s attorney in this scenario may reject the $25,000 offer, instead, choosing to litigate and delay. The insurance company’s maximum exposure is the $25,000 policy limit so they have nothing to lose by dragging it on. But if the case results in a verdict greater than $25,000, the individual who was sued will be responsible for the excess over the insurance company’s $25,000.
This is often considered breaching the duty of good faith and breaching the duty to defend because they’re not defending the right party. They put the interests of the insurance company ahead of the interests of the insured. The insurance company should be defending the insured, but instead, they are defending the insurer.
In sum, if you are defended by an attorney who is being paid by the insurance company, remember that they should be taking an interest in you and if that doesn’t appear to be the case, you should talk about it with an experienced insurance attorney.
Q: If I suspect that my insurance company attorney is not keeping my interests at the forefront, what could your law firm do for me?
We could consult with you about your situation, review your facts and circumstances and represent you right away if necessary.
The emotional distress of litigation for most people is significant because they’re not involved in litigation every day. Often, it will seem that the insurance company is just toying with them and putting them through unnecessary steps.
Q: Doesn’t it seem that they’d want to close out the case as quickly as possible because they’re paying their lawyers?
In theory, yes, but many of these attorneys are already on salary with the insurance companies. They are getting paid a high salary with the company, so it’s a fixed cost for the insurance company whether their attorneys litigate a claim or not.
Q: How would your law firm get paid if I were to hire you to defend me in my lawsuit?
A Nevada case states that when there is a conflict of interest, and the insured’s needs are at the forefront, the insurance company has to pay the outside counsel he or she were forced to hire.
Q: Are there damages other than the attorney’s fees?
If an insurance company acts in bad faith, you can recover emotional distress damages. The insurance company could also be forced to punitive damages as well.
Q: Should I continue to pay my premiums if the insurance company has denied my claim and I am fighting them about it?
Yes, you should pay your premiums. However, if you realize your insurance company is not acting in your best interest, it might be a good idea to get a different insurance carrier and speak to an experienced insurance attorney immediately.