Insurance policies are contracts built on the principle of good faith and fair dealing. This means both you, the policyholder, and your insurance company have a legal obligation to act honestly and fairly toward one another. In Nebraska, when an insurer violates this duty by unreasonably denying, delaying, or underpaying a valid claim, it is known as “bad faith.” Navigating this complex area of law alone is daunting. An experienced Nebraska bad faith insurance lawyer becomes an indispensable advocate, equipped with the knowledge and tools to challenge powerful insurance companies and fight for the full compensation you are owed under your policy and Nebraska law.
Understanding Bad Faith Insurance in Nebraska
Bad faith insurance practices are not merely a simple disagreement over the value of a claim. They involve a conscious, unreasonable decision by the insurer to place its own financial interests above those of its policyholder. Nebraska recognizes both common law (court-made) bad faith and statutory bad faith under the Nebraska Unfair Insurance Claims Practices Act.
Common examples of bad faith conduct in Nebraska include:
- Unreasonable Denial of a Claim: Refusing to pay a claim without a legitimate, investigation-backed reason.
- Unreasonable Delay in Payment: Intentionally stalling the claims process through endless requests for documentation, unnecessary investigations, or failure to communicate.
- Failure to Properly Investigate: Conducting a superficial or biased investigation designed to find reasons to deny the claim rather than to determine its validity.
- Lowball Offers: Making settlement offers significantly lower than the value of the claim, especially when liability is clear.
- Misrepresenting Policy Language: Knowingly misinterpreting or misstating the terms of the insurance policy to deny coverage.
- Failure to Defend: For liability insurance, refusing to provide a legal defense for a covered lawsuit.
Proving bad faith requires demonstrating that the insurer had no reasonable basis for denying the claim and either knew its actions were unreasonable or acted with reckless disregard. This is a high bar, necessitating a thorough understanding of insurance law and claims handling standards.
The Critical Role of a Nebraska Bad Faith Insurance Lawyer
Engaging a lawyer immediately shifts the dynamic of your claim. The insurance company is no longer dealing with an individual policyholder but with a skilled legal professional who understands their tactics and the laws that govern their conduct.
1. Case Evaluation and Determining Bad Faith
Your lawyer’s first step is a meticulous review of your case. They will scrutinize your insurance policy to confirm coverage, analyze the facts of your loss, and review all correspondence with the insurer. This evaluation determines if the insurer’s actions cross the line from a simple dispute into bad faith. A lawyer can identify subtle signs of bad faith that a policyholder might miss, such as inconsistent explanations for denials or violations of internal claims handling procedures.
2. Navigating Complex Policy Language
Insurance policies are dense, complex documents filled with legal jargon, exclusions, and conditions. Insurers may rely on this complexity to justify a denial. A lawyer deciphers this language, interprets its legal meaning under Nebraska law, and identifies any ambiguities. Nebraska courts consistently rule that ambiguities in policy language must be construed in favor of the policyholder, a powerful tool in a lawyer’s arsenal.
3. Managing Communication and Protecting Your Rights
Once retained, your lawyer will handle all communication with the insurance company, its adjusters, and its legal counsel. This prevents you from making inadvertent statements that could be misconstrued or used against you. All correspondence is strategically crafted to build the bad faith case, creating a clear record of the insurer’s unreasonable conduct and ensuring compliance with all policy conditions and Nebraska’s claims handling regulations.
4. Conducting a Thorough Investigation and Building a Powerful Case
A lawyer conducts an independent investigation far beyond what an individual can accomplish. This includes:
- Securing Expert Witnesses: Hiring engineers, contractors, medical professionals, or accident reconstructionists to provide unbiased reports on the cause and value of your loss.
- Utilizing Legal Discovery: If a lawsuit is filed, your lawyer can use subpoenas and depositions to obtain the insurer’s internal claim files, emails, and manuals. This is often where the most damning evidence of bad faith is found, such as notes prioritizing profit over policyholder interests.
- Documenting Every Interaction: Meticulously cataloging every delay, every unreasonable request, and every misrepresentation.
5. Calculating the Full Extent of Damages
In a successful bad faith lawsuit, you are not limited to the original policy benefits. Nebraska law allows for the recovery of several types of damages:
- Compensatory Damages: This includes the full amount of the underlying insurance claim.
- Consequential Damages: Compensation for additional financial losses caused by the bad faith denial (e.g., lost business income, credit damage, or foreclosure).
- Emotional Distress Damages: Compensation for the significant mental anguish and stress caused by the insurer’s actions.
- Attorney’s Fees and Costs: If you prevail, the court can order the insurer to pay your reasonable attorney’s fees and litigation costs.
- Punitive Damages: In cases of especially egregious, malicious, or willful conduct, a court may award punitive damages to punish the insurer and deter similar behavior in the future.
6. Litigation and Settlement Negotiation
Insurance companies are far more likely to offer a fair settlement when faced with a credible legal threat from a knowledgeable attorney. Your lawyer will negotiate from a position of strength, presenting the evidence of bad faith to maximize your settlement. If a fair settlement cannot be reached, they are prepared to file a lawsuit and advocate for you aggressively in court, presenting a compelling case to a judge or jury.
The Nebraska Unfair Insurance Claims Practices Act
This state statute (Neb. Rev. Stat. § 44-1536) defines specific claims practices as unfair and deceptive. Violations of this act constitute evidence of bad faith. Key provisions include:
- Misrepresenting pertinent facts or policy provisions.
- Failing to acknowledge and act promptly upon communications.
- Failing to adopt and implement reasonable standards for prompt investigation.
- Not attempting in good faith to effectuate prompt, fair, and equitable settlements.
- Compelling policyholders to initiate litigation by offering substantially less than the ultimate recovery.
A lawyer uses this statute as a checklist to hold the insurer accountable for its procedural failures.
What to Look for in a Nebraska Bad Faith Insurance Lawyer
When selecting legal representation, seek a lawyer or law firm with:
- Specific Experience: Choose a lawyer who focuses on insurance law, bad faith litigation, and first-party insurance disputes (e.g., homeowners, health, disability, life) or third-party disputes (e.g., auto liability).
- A Proven Track Record: Ask about their history of results in similar cases, including settlements and verdicts.
- Resources: Bad faith cases require significant resources for investigation and expert testimony. Ensure the firm has the capacity to fund your case effectively.
- A Clear Fee Structure: Most bad faith attorneys work on a contingency fee basis, meaning they only get paid if they recover money for you. Understand the percentage and what costs are covered.
The Process of Pursuing a Bad Faith Claim
The journey typically follows these stages:
- Initial Consultation: You provide all documentation, and the lawyer evaluates the merits of a potential bad faith case.
- Pre-Litigation Demand: Your lawyer sends a comprehensive demand letter to the insurer, outlining the bad faith conduct and demanding full payment of all damages, often within a specified timeframe.
- Filing a Lawsuit: If the demand is refused, your lawyer files a complaint in the appropriate Nebraska court, alleging breach of contract and bad faith.
- Discovery: Both parties exchange information through requests for documents, interrogatories (written questions), and depositions (sworn testimony).
- Settlement Negotiations: Negotiations continue throughout the litigation process. Most cases settle before trial.
- Trial: If no settlement is reached, the case proceeds to trial, where a judge or jury determines the outcome.
Facing an insurance company that is acting in bad faith is a frustrating and financially damaging experience. The deck is stacked in the insurer’s favor, relying on policyholders’ lack of legal expertise to save money. A dedicated Nebraska bad faith insurance lawyer levels the playing field. They provide the expertise, resources, and aggressive advocacy necessary to enforce the terms of your insurance contract, hold the company accountable for its unethical practices, and secure not just the policy benefits you were owed, but full compensation for the additional harm they have caused.
