- February 28 2023
- | Insurance
When your insurance company acts in bad faith, you may be able 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 may 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 Statute (NRS § 686A.310).
There are many ways an insurer can act in bad faith, but in general 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:
- Denial of a claim
- Delay in payment of a claim
- Underpayment of a claim.
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.
What Damages Can Be Recovered in a Bad Faith Case?
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 that 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 that the insurance company acted 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, you may strongly increase your chances of recovering the full compensation you deserve.
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 that 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 because of 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.
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 payment. 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, which can cause you significant stress and anxiety. The following sections describe possible non-economic damages for different types of insurance claims.
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 shows 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 you may have felt fear and stress. Your car may have suffered extensive damages, so you are now stuck without it while it is being repaired. This adds more difficulty to your life because you have to arrange daily transportation to work, school and elsewhere. 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) all the time. So, you will likely feel highly distressed if 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 deciding 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.
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
You may wonder, 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 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 policyholders pain and suffering. These types of bad faith claims can lead to very costly damages. Here’s an example to show you how.
- A Patient Needs Expensive Treatment for Cancer
The news given to an individual that they have cancer is devastating. Besides the fear of what the future may hold, the patient probably expects that they’ll need surgery, radiation, chemotherapy, or a combination of these treatments. Once they’ve had a few days to deal with the initial shock of their diagnosis, the doctor tells them there is a newly available treatment that has great success with the type of cancer they have. It is called photon radiation therapy. It can narrowly target just the cancerous growth and saves other tissue and organs from harm. The doctor tells them it is their best, and perhaps only, chance to survive the disease, and tells them it has provided positive results for other patients in the same situation.
- The Patient’s Chance for Effective Treatment is Denied
When the health insurance claims are filed to provide coverage for the photon radiation treatment, the following process typically happens: A doctor who is employed by the insurer reviews the 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 the doctor has only a few minutes to evaluate the claim before tackling the large volume of others, the doctor denies the coverage. Just like that, the patient’s life hangs in the balance and, in an instant, their chance at survival is compromised. The patient’s own physician helps them file an appeal to get another review of the claim. That, too, is denied by the insurer.
- Damages for Emotional Distress and Pain and Suffering
Though the specialized photon radiation treatment was denied, the patient was able to receive traditional chemotherapy and radiation. Sadly, that treatment is unsuccessful. The cancer persists, and so do the physical symptoms as the person’s body weakens. In this situation, the patient can seek damages for their emotional distress caused by facing an outcome—a potential death sentence–that may have been averted by the insurer’s approving the claim submitted to cover the costs of photon radiation therapy. They also can seek damages for pain and suffering as their extended suffering was unnecessary. If the patient has passed away, it may be their surviving family members who bring the bad faith lawsuit.
This tragic outcome of the denial to pay the 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 has a potentially fatal illness, 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.
In this example of a patient having been denied the specialized, effective treatment for cancer, it may also be possible to pursue punitive damages in a bad faith lawsuit. The insurer must have acted with harmful intent or malice. As a result of these actions, the patient may have died.
The family of the patient 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, it will cause the insurer to change their practices. After this lawsuit, hopefully the insurer will change how they review claims so that no other family will experience the same pain, suffering and emotional distress as theirs 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, it should be a large dollar amount. In this case, it 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 bad faith insurance cases, unlike limitations put on punitive damages in other types of personal injury cases.
How Much is a Bad Faith Claim Worth?
There is no single or simple answer to this question. Every claim is different and has its own intricacies. How much your bad faith claim is worth will depend on all the factors involved in your case. These factors include the economic and non-economic damages you have suffered and whether you can pursue punitive damages, which can greatly increase how much compensation you could receive.
How much your bad faith claim is worth will also be influenced by the strength of the evidence against your insurance company and your attorney’s skill in developing that evidence.
Our attorneys will evaluate all the circumstances and details of your situation and help you determine the maximum value that your bad faith claim could be worth.
Contact Our Nevada Bad Faith Insurance Attorneys for Help
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 stand a better chance of a beneficial outcome when you work with attorneys who know how to take on insurers who act in bad faith. 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 going it alone.
Our team of experienced attorneys at Leverty & Associates Law have a long history of fighting for policyholders who are treated unfairly by insurers that refuse to act in good faith. We’ll handle all communications with the insurance company representatives and their legal team and keep you fully informed as we fight on your behalf. We will be your strongest advocate in getting you the compensation you deserve.
Insurers want to protect their bottom line. Our attorneys want to protect your rights.
Contact us for help today so we can discuss your situation and begin the path to getting you justice. We offer free consultations. Call us in Reno: (775) 322-6636 or Las Vegas: (702) 507-0201.