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What Is The Time for Responding to a Defense Tender?

Insurers must acknowledge a claim within 20 days of receipt of notice. Nev. Admin. Code § 686A.665.

Insurers must affirm or deny coverage within 30 days of receipt of proof of loss. Nev. Admin. Code § 686A.675.

Does Reserving Rights Create a Conflict of Interest? 

No cases found.

Does a Reservation of Rights Create Additional Duties?

When an insurer undertakes the defense and controls of the investigation and settlement of the litigation, Nevada law requires that the insurer give equal consideration in good faith to the interests of the insured as well as its own interests. Crystal Bay General Improvement District v. Aetna Cas. & Sur. Co., 713 F.Supp. 1371, 1379 (1989).

What Must Be Done If A Conflict of Interest Exists?

No cases found.

Who Is Responsible for Fees of Independent Counsel?

No cases found.

What Are Independent Counsel’s Obligations?

No cases found.

What Settlement Duties Exist?

No cases found.

What Actions May Result in a Claim for Bad Faith?

Common law bad faith:  Nevada recognizes a bad faith cause of action.  United States Fidelity & Guar. Co. v. Peterson, 540 P.2d 1070, 1071 (1975).  “Nevada’s definition of bad faith is: (1) an insurer’s denial of (or refusal to pay) an insured’s claim; (2) without any reasonable basis; and (3) the insurer’s knowledge or awareness of the lack of any reasonable basis to deny coverage, or the insurer’s reckless disregard as to the unreasonableness of the denial.” Schumacher v. State Farm Fire & Casualty Co., 467 F. Supp. 2d 1090, 1095 (D. Nev. 2006).

Nevada recognizes a common law cause of action in tort (not contract) for a breach of implied covenant of good faith and fair dealing which is grounded in the special relationship between insurer and insured. Insurance Co. of the West v. Gibson Tile Co., 134 P.3d 698, 702 (Nev. 2006).

An insurer who fails to settle a claim against the insured within the policy limits may found to exhibit bad faith if it can be shown that the insurer acted in deliberate refusal to discharge its contractual duties. Allstate Ins. Co. v. Miller, 212 P.3d 318, 328 and 330 (Nev. 2009).

Consumer Protection Act:  Insured may also have a claim for violation of Nevada’s Consumer Protection Act, which  creates a private cause of action for damages incurred as a result of enumerated statutory violations, but a violation does not automatically constitute common law bad faith. Hart v. Prudential Property & Cas. Ins. Co., 848 F. Supp. 900, 904 (D. Nev. 1994).

Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?

No cases found.

Are Punitive Damages Recoverable in Insurer-Insured Dispute?

Punitive damages may be awarded “in an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice, express or implied.” Nev. Rev. Stat. § 42.005.

Alternative Coverage Options

An insurer may seek declaratory relief while the underlying action is still pending. See State Farm Fire and Casualty Ins. Co. v. Smith,  907 F.2d 900 (9th Cir. 1990).

An insurer may seek permissive intervention in the lawsuit against its policyholder for the purpose of crafting special interrogatories to permit apportionment of the damages between covered and non-covered claims.  Fidelity Bankers Life Insurance Company v. Wedco, Inc., 102 F.R.D. 41, 44 (D. Nev. 1984).

Relevant Statutes

Declaratory Judgment – Nev. Rev. Stat. § 30.030

“Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.  No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for.  The declaration may be either affirmative or negative in form and effect; and such declaration shall have the force and effect of  a final judgment or decree.”

Unfair Claims Settlement Practices Act (“UCSPA”)  – Nev. Rev. Stat. § 686A.310.

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