Examples of Bad Faith in Insurance

• November 11 2025
• |   Insurance

Insurance companies owe policyholders a duty of good faith and fair dealing. When carriers violate that duty through delays, denials, or deceptive practices, their conduct may constitute bad faith. Nevada law holds insurers accountable when they prioritize profits over the rights of policyholders.

Under Nevada law, bad faith claims are only available to first-party policyholders—meaning those who have a direct insurance contract with the insurer. Third-party bad faith claims are not permitted in Nevada.

Key Takeaways for Bad Faith Insurance Claims

• Unreasonable delays without explanation, such as months of silence or endless “investigations,” often signal bad faith under Nevada Revised Statutes 686A.310.
• Disputes over claim valuation alone do not constitute bad faith—evidence must show the insurer acted without reasonable basis or with deliberate disregard for policyholder rights.
• Nevada law requires insurers to provide clear, specific reasons for claim denials, citing relevant policy provisions and investigation findings.

Unreasonable Delays Without Justification

Your house fire was three months ago. The adjuster visited once, requested documents you provided within days, then disappeared. Phone calls go unreturned. Emails receive generic responses promising updates that never arrive.

Why this may be bad faith: Nevada law requires prompt claim acknowledgment and reasonable investigation timelines. Months of unexplained inactivity might suggest deliberate stalling.

The Document Loop That Never Ends

You submitted repair estimates, receipts, and police reports. Two weeks later, the adjuster requests the same documents again. You resend everything. They ask for the documents a third time.

Why this may be bad faith: Repeatedly demanding identical documentation creates artificial obstacles. When insurers possess necessary information but continue requesting it, they may be manufacturing delays.

Lowball Valuations Without a Reasonable Basis

The adjuster offers $8,000 for your totaled vehicle. Three dealerships quoted $15,000 to $16,000 for comparable models. When you question the valuation, the adjuster vaguely references “market data” but refuses to explain.

Why this may be bad faith: Disputes over claim valuation alone do not constitute bad faith under Nevada law. To establish bad faith, there must be evidence that the insurer acted without a reasonable basis or with deliberate disregard for policyholder rights. Offering substantially below market value without justification may suggest such conduct.

Misrepresenting Policy Coverage Terms

Your homeowners’ policy includes water damage coverage. After a pipe burst floods your basement, the adjuster claims the policy excludes all water damage. You read the policy yourself—it excludes flood damage from external sources but covers internal plumbing failures.

Why this may be bad faith: Intentionally misstating policy terms constitutes deceptive conduct. The Nevada Division of Insurance oversees insurer conduct and enforces consumer protections, but policy interpretation in bad faith cases is ultimately decided by courts.

Claiming Lower Limits Than the Policy States

Your declarations page shows $300,000 in dwelling coverage. After your Reno home sustains fire damage, the claims representative insists your policy only provides $200,000. When you reference the declarations page, they claim an “error” occurred.

Why this may be bad faith: Policy documents create binding contracts. Insurers cannot retroactively reduce limits after losses occur.

Reinterpreting Exclusions Mid-Claim

Your insurer initially indicates coverage applies. Weeks later, after you’ve incurred additional living expenses, they cite a policy exclusion never mentioned before.

Why this may be bad faith: Shifting coverage positions without reasonable justification may suggest insurers are searching for denial grounds rather than fairly evaluating claims.

Ignoring Evidence and Failing to Investigate

You provided photos, videos, and witness statements documenting your Las Vegas property damage. The adjuster never views the evidence. Your claim receives a denial without any indication that the insurer reviewed your materials.

Why this may be bad faith: Nevada law requires a reasonable investigation before claim decisions. Refusing to examine relevant evidence violates investigation obligations.

Declining Property Inspections

Your homeowners claim involves structural damage requiring professional assessment. You request multiple times that the insurer inspect the property. The adjuster repeatedly postpones inspections, then denies the claim citing “insufficient evidence.”

Why this may be bad faith: Insurers cannot deny claims for lacking evidence that they refused to gather.

Wrongful Denials Without Reasonable Explanation

You receive a one-paragraph denial letter stating your claim is denied “per policy terms” with no specific explanation. The letter cites no policy provisions or investigation findings.

Why this may be bad faith: Nevada law requires insurers to provide a clear and specific reason for claim denials, citing relevant policy provisions and investigation findings.

Contradicting Previous Adjuster Statements

Your adjuster verbally confirmed coverage and estimated a settlement amount. Weeks later, a denial letter arrives claiming the loss never fell under coverage.

Why this may be bad faith: Insurers cannot induce reliance through coverage assurances, then reverse positions without explanation.

Delaying Payment After Accepting Coverage

Your insurer acknowledged your fire claim, admitted coverage applies, and agreed to the damage valuation. That was two months ago. Despite repeated inquiries, no payment has arrived.

Why this may be bad faith: Once insurers accept liability and agree on amounts, unreasonable payment delays violate fair dealing obligations.

Partial Payments Without Explanation

Your agreed settlement totaled $50,000. The insurer sends a check for $20,000 with no accompanying letter. Calls to the adjuster go unreturned.

Why this may be bad faith: Unexplained partial payments create confusion. When insurers deviate from settlement terms without communication, they may be hoping policyholders accept less.

Pressure Tactics to Accept Inadequate Settlements

The adjuster tells you, “This is the best offer you’ll get.” When you mention consulting an attorney, they warn that “getting lawyers involved” means the settlement offer disappears.

Why this may be bad faith: Insurers cannot coerce policyholders into accepting settlements through threats. Nevada law protects policyholder rights to legal consultation.

Threatening Premium Increases for Pursuing Claims

Your insurer suggests that continuing your claim might result in policy cancellation or rate increases. They imply that accepting their low offer protects your insurability.

Why this may be bad faith: Using threats about future coverage to suppress legitimate claims constitutes improper conduct.

How a Bad Faith Insurance Lawyer Helps Protect Your Claim

When insurers delay, minimize, or deny claims without a reasonable basis, policyholders often struggle to understand what is happening behind the scenes. A bad faith attorney reviews the entire claim file, identifies where the insurer’s conduct strayed from Nevada law, and evaluates whether the carrier failed to meet its contractual duties.

Legal support also helps level the playing field. Insurers rely on internal guidelines, valuation tools, and policy interpretations that may not be obvious to policyholders. An attorney examines those materials, assesses the investigation steps the insurer completed or avoided, and compares the insurer’s conduct to industry standards.

When warranted, a lawyer may pursue a bad faith action to obtain wrongfully withheld benefits and the financial harm caused by improper delays or denials. In serious cases, Nevada law also permits punitive damages when evidence shows conduct involving fraud, malice, or oppression. This process not only addresses the immediate loss but may help prevent continued unfair practices.

FAQ for Bad Faith Insurance Claims

How long do Nevada insurers have to respond to claims?

Nevada law requires insurers to affirm or deny coverage within 30 working days after receiving properly executed proofs of loss. Failure to respond within this timeframe may constitute bad faith.

What is the statute of limitations for bad faith claims in Nevada?

The statute of limitations for a bad faith insurance claim in Nevada is four years from the date of the insurer’s wrongful act. Missing this deadline bars recovery.

What damages might I recover in a bad faith insurance case?

Nevada law permits recovery of policy benefits that were wrongfully withheld, consequential damages from improper denials or delays, and emotional distress damages if the insurer’s conduct caused more than minor inconvenience and the policyholder provides supporting evidence such as medical records. Punitive damages may be awarded only when the insurer’s conduct involved fraud, malice, or oppression.

Your Claim Deserves Fair Treatment

Leverty & Associates fights for fair compensation when Nevada insurers act in bad faith. The firm represents policyholders in Reno and Las Vegas facing improper claim handling. Our team’s deep insurance knowledge has produced over $150 million in recoveries for clients.

Contact Leverty & Associates for a free consultation. For Reno insurance and personal injury matters, call (775) 322-6636. For Las Vegas bad faith insurance claims, call (702) 507-0201. The firm handles bad faith cases on a contingency fee basis.

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