What Type of Damages Would You Seek in An Insurance Bad Faith Lawsuit?

LEARN ABOUT THE THREE TYPES OF DAMAGES IN A BAD FAITH LAWSUIT

YOU CAN SUE YOUR INSURANCE COMPANY FOR YOUR LOSSES IN A BAD FAITH CASE

When your insurance company acts in bad faith, you can make a legal claim to recover losses caused by the insurer’s actions. When you take legal action in a bad faith lawsuit, there are different types of losses, also called “damages,” for which you can be awarded compensation.  To better understand the possible damages available to you, it may help to know ways an insurer can act in bad faith or fail to perform their legal duty to handle your insurance claim as required by Nevada Statutes (NRS § 686A.310)1.

Typically, there are three ways that insurers may act in bad faith and fail to uphold their duties as defined by an insurance policy. They are:

Depending on the type of insurance claim involved, the cost to you of the insurer’s bad faith actions can vary. Likewise, the damages associated with the type of insurance claim — whether it is car, home, or health insurance — can vary, too.

In general terms, there are three broad categories of damages: economic, non-economic and punitive. Economic damages can be clearly defined because they are easily quantifiable costs, like a property loss or a medical bill. Non-economic damages require more rationale to prove a loss or harm exists and how much that loss or harm is worth. Examples of non-economic damages are costs of pain and suffering or emotional distress. Punitive damages can be awarded when it is shown the insurance company acted in with oppression, fraud, or malice.

Knowing what damages you can pursue is important to the strategy of your lawsuit, and the amount you can recover can be substantial, depending on your case. When you work with a highly experienced bad faith attorney, like those on our team at Leverty & Associates, you will strongly increase your chances of recovering the full compensation you deserve.

ECONOMIC DAMAGES IN A BAD FAITH CLAIM

For different types of insurance, the economic damages you suffer directly relate to the same losses for which you filed your insurance claim. For example, if your home is damaged in an extreme weather event such as strong winds or a wildfire, you will have losses to your property you can clearly calculate. Your house itself will need repairs, your furniture and other belongings may need to be replaced, or you may have suffered a total loss and need to replace all you own as well as rebuild your home. Because you faithfully paid your home insurance premium every month, you can reasonably expect that the coverage the insurance policy promises would be honored by your insurer.

When the company instead stalls on payment of your claim, denies it, or simply underpays, covering only a portion of your losses, they act in bad faith. As a result, you can seek economic damages for the harm their bad faith actions caused you. As a result of their actions, you have a lot of very expensive repairs that you need but now must somehow cover on your own. Those expenses comprise the economic damages in your lawsuit.

If you face the same issue with a car accident, the economic damages relate to the losses associated with your vehicle, as well as other losses you suffered. If you were badly injured, you will have large medical bills. You will have lost income from your inability to work. You may have needed to obtain other transportation because you are without a car, or your injuries prevent you from driving. If your bad faith case involves health insurance, you could seek to recover costs for hospital bills, physical and occupational therapy, lost wages, and transportation needed for your medical appointments.

NON-ECONOMIC DAMAGES YOU CAN PURSUE

When an insurer refuses to pay all, or a portion of, your claim, the failure to act in good faith may cause you harm beyond the lack of payments you deserved as defined by your insurance coverage. When you file an insurance claim, your life has already been affected negatively by some type of event, injury, or accident. The last thing you need at such a time is for the insurance company you counted upon to refuse or delay payment of your claim.

NON-ECONOMIC DAMAGES IN A CAR INSURANCE BAD FAITH CLAIM

Bad faith actions by an insurer related to an auto insurance claim can cause you emotional distress. A look at a detailed example can show you how.

Car Accidents Are Inconvenient, at the Very Least

If you’ve had a minor car accident, you may not have suffered severe physical injuries, but the damage to your car may be very expensive. Costs to repair autos after a crash can quickly add up, even in the case of a simple fender bender. While you may not have been hurt, the accident probably caused you to feel fear and stress. Then, you’re stuck without your vehicle while it is repaired. This adds more difficulty to your need for daily transportation to work, school and stores for essentials. You face these challenges as you await negotiation with your insurer about what is covered by your policy and what’s not.

You might expect some delay in the processing of your claim before you can get your car repaired and back on the road. It is reasonable that an insurer needs time to handle some administrative work. But this is the core of their business: they handle payment of claims (and receipt of premiums). Suddenly, in the midst of the process, the insurer surprises you with notification that they won’t pay your claim. Or they unexpectedly drag out which auto shop they will approve for your repairs. Or they notify you that they won’t pay the full costs to fix the damage to your car. Denial, delay, or underpayment of your claim are all potentially bad faith actions. Nevada law makes clear that a delay in payment of a claim for damages to a vehicle is illegal (NRS §686A.300) 2.

The Stress of Your Repair Bill

The inconvenience of being without your car for transportation now may pale in comparison to the stress you feel when your insurer refuses to provide you payment for what is clearly covered in your policy. You’ve kept up with your premium payments every month, knowing that if the time comes when you need help, your insurance coverage would protect you from having to pay out large sums of money.

That trust in your insurance company has been breached when they don’t honor your policy and perform the duty the policy obligates them to perform.

Emotional Distress Caused by Financial and Transportation Worries

Some of our clients ask, can you sue an insurer for emotional distress? In short, the answer is yes. The difficulties you face caused by the insurer’s bad faith may result in emotional distress related to your not knowing how you will find money to repair your vehicle. You also may feel great anxiety about how you’ll get to work. Perhaps you live in a location without public transportation. Maybe you can’t afford to rent a car.

Any of these financial issues can cause you harm, and that harm can be quantified as non-economic damages. This harm exists whether the insurer’s bad faith act is a complete denial of your claim, underpayment where you are still stuck with a large repair bill, or a long delay to pay your claim. Any of these bad faith actions mean you must cover the costs of repairs on your own and then get reimbursed weeks or months later.

Emotional distress damages relate to the mental anguish suffered by the policyholder caused by having to deal with the insurance company and its bad faith conduct. Having a loss for which you need to make an insurance claim is already a stressful situation, and when your insurance company denies or delays paying your claim, that adds to your stress. This is why you can sue an insurance company for emotional distress.

NON-ECONOMIC DAMAGES IN A HEALTH INSURANCE BAD FAITH CLAIM

Bad faith actions by a health insurance company can cause you pain and suffering. These types of bad faith claims can lead to very costly damages. Here’s an example to show you how.

You Need Expensive Treatment for Cancer

The news that you have cancer can make your stomach drop. You may fear it means your days are numbered. You probably expect that you’ll need surgery, radiation, chemotherapy, or a combination of these treatments. Or, perhaps it’s your loved one facing this grim diagnosis and your fears are just as powerful. Once you’ve had a few days to deal with the initial shock of your diagnosis, your doctor tells you there is a newly available treatment that has great success with the type of cancer you have. It is called photon radiation therapy. It can narrowly target just the cancerous growth and will save your other tissue and organs from harm. Your doctor tells you it is your best, and perhaps only, chance to survive the disease. She tells you it has provided positive results for other patients in the same situation.

Your Chance for Effective Treatment is Denied

When the health insurance claims are filed to provide coverage for your photon radiation treatment, this typical process happens: A doctor who is employed by the insurer reviews your claim, along with a staggering number of other claims. This doctor has little to no experience in treating cancer patients and is not familiar with photon radiation therapy. Because he has only a few minutes to evaluate your claim before he tackles the large volume of others, he denies the coverage. Just like that, your life hangs in the balance and, in an instant, your chance at survival is taken from you. Your own doctor helps you file an appeal to get another review of your claim. That, too, gets denied by your insurer.

Damages for Emotional Distress and Pain and Suffering

Though the specialized photon radiation treatment was denied, you were able to receive traditional chemotherapy and radiation for your cancer. Sadly, that treatment is unsuccessful. Your cancer persists, and so do the physical symptoms as your body is slowly consumed by the disease. In this situation, you can seek damages for your emotional distress caused by facing a certain death that may have been averted by your insurer’s approving the claim submitted to cover the costs of photon radiation therapy. You also can seek damages for pain and suffering. Fatal cancer is a slow and difficult way to die, and your extended suffering was unnecessary. In this situation, it may be your surviving family members who bring the bad faith lawsuit because, sadly, you have already passed away.

This tragic outcome of the denial to pay your health insurance claim could also be the result of an unreasonable delay in payment of a claim. When an insurer takes a very long time to approve payment of a claim, particularly when a patient’s time is short, the results can be dire. Even a delay in handling a claim can be considered an act of bad faith, and you can seek non-economic damages in a lawsuit.

PUNITIVE DAMAGES

In this example of your having been denied the specialized, effective treatment for cancer, it may also be possible to pursue punitive damages in a bad faith lawsuit. Your insurer must have acted with harmful intent or malice. As a result of these actions, you may have died.

Then, your family is left grieving, hurting, frustrated and likely angry. They want justice and they hope that if they can get a large enough punitive damages award that it causes the insurer to change their practices. After this lawsuit, hopefully, they will change how they review claims so that no other family will experience the same pain, suffering and emotional distress as yours did.

Typically, the way to seek that change is to make the punishment strong enough that it has a powerful effect on the insurance company’s bottom line. If you, or your loved ones, seek punitive damages in a bad faith lawsuit, they should be a large dollar amount. In this case, they can be as high as you and your attorney see as being appropriate. According to Nevada law, there are no limits on punitive damages in a bad faith insurance case, unlike limitations put on punitive damages in other types of personal injury cases (NRS §42.005 (2)(b)) 3.

DAMAGES IN A BAD FAITH LAWSUIT APPLY TO ALL TYPES OF INSURANCE

Whether you submit an insurance claim for payment after a car accident, a flood or hail event that damages your home, or a healthcare procedure or surgery, you have the right to expect that your insurer will act reasonably and uphold their duty as outlined in your policy. When an insurer fails to do so and acts in bad faith, you have grounds for a lawsuit and can seek all relevant damages in your case.

Knowledge of Nevada’s laws and experience with bad faith cases is integral to success in a lawsuit. These types of lawsuits are inherently complex. That’s why you shouldn’t try to take on insurers and their team of attorneys on your own. If the harm caused by the insurer is egregious and you may have cause to ask for punitive damages in addition to economic and non-economic damages, you’ll face an even tougher battle.

Our team of attorneys at Leverty & Associates have a long history of fighting for policyholders who are unjustly treated by insurers that refuse to act in good faith. We will be your strongest advocate in court, and we’ll handle all communications with the insurance company representatives and legal team. We’ll keep you fully informed as we fight on your behalf.

Insurers want to protect their bottom line. Our attorneys want to protect your rights.

Give us a call for help today at (775) 322-6636 so we can discuss your situation and begin the path to getting you justice.

SOURCES

1  Nevada Revised Statutes 686A.310.  Unfair practices in settling claims; liability of insurer for damages. https://www.leg.state.nv.us/nrs/NRS-686A.html#NRS686ASec310

2  Nevada Revised Statutes §42.005 (2)(b). Exemplary and punitive damages: In general; limitations on amount of award; determination in subsequent proceeding. https://www.leg.state.nv.us/nrs/nrs-042.html#NRS042Sec005

3  Nevada Revised Statutes §686A.300. Delay in payment of claim for damages to motor vehicle after receipt of statement of charges prohibited; settling claim without providing for repair of vehicle permitted; exception.  https://www.leg.state.nv.us/nrs/NRS-686A.html#NRS686ASec300

Attorney Patrick Leverty

Attorney Patrick LevertyWith his master’s in insurance law, Patrick routinely helps individuals and businesses who are having issues with their insurance company. He also has extensive experience with personal injury actions, complex tort actions, product liability matters, and class actions. Patrick Leverty is rated AV by Martindale Hubbell (the highest rating) and has been granted membership in the Million Dollar Advocate Forum, and Multi-Million Dollar Advocate Forum. Patrick Leverty has been certified as a Personal Injury Specialist by the State Bar of Nevada. [ Attorney Bio ]

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