Understanding Your Rights Under Nebraska’s Insurance Laws
Nebraska operates under a “fault” system for car accidents, meaning the driver who causes the accident is financially responsible for the resulting damages. This system places a significant legal obligation on insurance companies to act in good faith. When you file a claim, you enter into a contract where the insurer promises to investigate and pay valid claims promptly. Nebraska’s insurance statutes, particularly the Unfair Insurance Trade Practices Act (Neb. Rev. Stat. § 44-1521 et seq.), explicitly prohibit practices like misrepresenting facts or policy provisions, failing to acknowledge and act reasonably promptly upon communications, and not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
A delay becomes unreasonable when it lacks a legitimate basis. Insurers are entitled to a reasonable period to investigate a claim, especially if fraud is suspected or liability is unclear. However, if the facts are straightforward and liability is clear, an extended delay without communication or a valid explanation can be a breach of this duty of good faith and fair dealing.
Common Reasons for Delayed Payments and Their Validity
Insurance companies may cite various reasons for delays. Understanding which are legitimate and which may be a pretext is crucial.
- Legitimate Investigation: An insurer may need time to verify details, assess complex damage, obtain police reports, or wait for medical prognoses to understand the full extent of injuries. A few weeks for a thorough investigation is typically reasonable.
- Disputed Liability: If there is a genuine disagreement over who was at fault, the delay can be justified while additional evidence is gathered. However, this should be an active investigation, not a passive delay.
- Incomplete Documentation: If you, your healthcare providers, or the auto repair shop have not submitted all necessary paperwork, the claim process will stall. Ensuring you promptly provide all requested information is critical.
Conversely, some reasons are often indicative of bad faith:
- “Still Investigating” as a Stalling Tactic: Using this phrase repeatedly for months on a clear-cut claim.
- Frequent Adjuster Changes: Internal disorganization that causes your file to be repeatedly reassigned and forgotten.
- Lowball Offers Followed by Delay: Making an offer far below the claim’s value and then delaying in hopes you will accept it out of desperation.
- Ignoring Communications: Failing to return calls or emails, making it impossible to resolve outstanding issues.
The Escalating Consequences of Delayed Payments
The impact of an insurance payment delay extends far beyond simple frustration. It can create a cascade of serious financial and personal problems.
- Financial Hardship: You may be unable to pay for necessary car repairs, leaving you without reliable transportation. Medical bills from accident-related injuries can pile up, leading to calls from collections agencies and damage to your credit score. You may also face costs for renting a replacement vehicle, which can quickly become unsustainable.
- Legal Vulnerability: If your vehicle was financed or leased, your lienholder has a financial interest in it. They will require it to be repaired properly. If the insurance delay prevents repairs, you could be in violation of your loan or lease agreement. Furthermore, Nebraska has a statute of limitations for personal injury and property damage claims (generally four years for injury and also four years for property damage). An insurer’s delay can run down the clock, potentially jeopardizing your right to sue the at-fault driver if a settlement cannot be reached.
- Increased Stress and Emotional Distress: The financial pressure and constant battle with a large insurance company can be incredibly stressful, often exacerbating the recovery process for those dealing with accident-related injuries.
Proactive Steps to Take Before Seeking a Lawyer
Before escalating to legal counsel, there are several steps you should take to try to resolve the delay yourself and build a strong record.
- Meticulous Documentation: Create a dedicated file for your claim. This includes the accident report, all correspondence (letters, emails), detailed notes of every phone call (with date, time, who you spoke with, and what was said), photos of the damage and accident scene, copies of all medical bills and reports, and receipts for any out-of-pocket expenses like rentals or medications.
- Formal Written Complaint: Send a clear, concise, and professional letter via certified mail to the insurance adjuster and their supervisor. Outline the history of the claim, the point at which the delay began, and demand a specific response—such as a decision on your claim or a detailed explanation for the delay—within a reasonable timeframe (e.g., 10 business days). This creates a formal paper trail.
- File a Complaint with the Nebraska Department of Insurance: This is a powerful free recourse. The DOI is the state regulatory body that oversees insurance companies. You can file a formal complaint online or by mail. The DOI will then contact the insurer on your behalf and demand an explanation. Often, the involvement of a state regulator is enough to prompt immediate action from the insurance company. The DOI will investigate whether the insurer violated state laws and can issue fines or other penalties.
How a Nebraska Lawyer Can Force Resolution
When proactive measures fail, retaining a lawyer specializing in insurance disputes or bad faith litigation is the most effective step. Their involvement signals to the insurance company that you are serious and prepared to litigate.
- Case Evaluation and Demand Letters: An attorney will review your case to determine if the delay constitutes bad faith. They will then typically issue a powerful demand letter to the insurer, outlining the legal violations (breach of contract, bad faith) and the damages you are owed. This formal legal communication often prompts a swift settlement to avoid litigation.
- Litigation for Breach of Contract and Bad Faith: If the demand letter is ignored, your lawyer can file a lawsuit. This suit can seek two types of damages:
- Compensatory Damages: This covers the original value of your claim—vehicle repair, medical bills, lost wages, and pain and suffering.
- Consequential Damages: These are the additional losses caused by the delay itself, such as credit damage, additional rental car fees, and late payment penalties.
- Punitive Damages and Attorney Fees: In cases of egregious bad faith, Nebraska law may allow for punitive damages, which are intended to punish the insurer for its misconduct and deter similar behavior. Furthermore, Neb. Rev. Stat. § 44-359 allows a court to award reasonable attorney fees to the plaintiff if the insurer refused to pay the claim without reasonable litigation defense. This is a critical statute that helps level the playing field for consumers.
Finding the Right Nebraska Legal Assistance
Look for law firms or solo practitioners who explicitly mention practice areas such as:
- Insurance Law / Insurance Disputes
- Bad Faith Insurance
- Personal Injury (as these cases almost always involve insurance claims)
The Nebraska State Bar Association website offers a lawyer search function. Consultations are often free or low-cost. During the consultation, ask about their experience with delayed payment cases, their strategy for resolving them, and their fee structure. Many attorneys in this field work on a contingency fee basis for the bad faith portion of a claim, meaning they only get paid if they recover money for you.
