Strategies, Challenges, and Answers

Nevada Allows Policyholders To Sue Certain Managing General Agents and Third-Party Administrators For Bad Faith

An agent who acts for a disclosed principal is not liable for commitments made by the agent in the principal’s behalf.  See ALI’s Restatement (Second) of Agency § 320 (1958).  In the field of insurance, managing general agents, third-party administrators and independent adjusters have regularly shielded themselves from claims of bad faith brought by policyholders’ against the insurance company for which that agent works.  But that rule of hornbook law is beginning to erode following insurance … [Read more...]

A Breach of Nevada’s Unfair Claims Settlement Practices Act Does Not Amount To Bad Faith Per Se

Good Faith Gone Bad In United States Fidelity & Guaranty Co. v. Peterson, 91 Nev. 617, 540 P.2d 1070 (1975) the Nevada Supreme Court allowed a common law action by an insured against his insurer for a breach of the implied covenant of good faith and fair dealing, commonly called “bad faith”. In order to sustain a bad faith claim, the plaintiff must prove that: 1)   The insurer denied or refused to pay an insured’s claim; 2)   The insurer had no reasonable basis to deny or refuse to pay … [Read more...]

U.S. District Court For Nevada Refuses To Dismiss Extra-Contractual Claims Even Though It Finds There Is No Coverage

Mr. Turk was a builder.  His companies and others built the Rancho del Norte Villas.  The construction was supposed to comply with the Fair Housing Act.  It didn’t.  The Disabled Rights Action Coalition sued Turk and a number of others for the alleged violations. Turk turned to several insurance policies that he thought should cover him.  After various attempts to get a response, he filed for declaratory relief.  Ultimately, the court determined that there was no coverage under any of the … [Read more...]