In the bustling Las Vegas economy, the pathway to continued performance and protection from the unknown is insurance. Business owners, for their part, put their faith in their insurers to be more than just financial backers. They reasonably expect certain stability and accountability from those companies. When an insurer shirks that responsibility, policyholders can be left in hard positions. A specialized bad faith attorney in Las Vegas can help business owners in need understand what they are up against and make informed decisions against dishonest tactics in this process.

The Crucial Role of Insurance for Businesses

Insurance policies are essentially the lifeblood of a business. They provide coverage for a wide variety of potential losses, from property damage to lawsuits. A Las Vegas restaurant might utilize its coverages to help rebuild after a kitchen fire, for instance. A retail store might have liability insurance to tackle a customer injury. These policies produce the peace of mind necessary, so should the worst come to pass, a business will be able to replenish itself and continue its business of doing business.

However, when insurers make dishonest decisions — like denying, delaying, or lowballing claims — the results can be disastrous. The unfortunate reality is that filing and processing insurance claims doesn’t often occur at a good time. For business owners, especially, expending time and energy in that direction might feel like trying to spin plates.

In certain industries and markets — like the Las Vegas tourism and hospitality sectors — finding that balance can be almost as important as the money. Compromises or disruptions to daily operations in that regard can be damaging and may not be sustainable in the long run. Dishonest insurance companies have an unfortunate and dangerous talent for ruining that balance for seemingly no good reason at all, leaving some business doors permanently closed in the process.

Understanding Bad Faith Insurance

At its simplest, handling claims in bad faith means that an insurer is acting dishonestly and without a valid reason. The actions are different from inadvertent mistakes or misunderstandings. Bad faith describes a process when an insurer knows that its actions are unreasonable — either based on the law or the policy— and continues along that route anyway. When that happens, policyholders can take legal action and ask a court to compel the insurer to handle the claim properly. 

For example, imagine that a nightclub is flooded and suffers substantial property damage during an unforeseen citywide event thanks to a weather phenomenon. Even though they have purchased comprehensive insurance to help with that type of damage, the insurer may avoid paying by making a nonsensical and arbitrary claim that the damages exceed certain policy limits. When the insurer does this, the nightclub is left with lost profits, potential debts, and jeopardy to your customer and supplier relationships.

The Far-Reaching Impact of Bad Faith Claims

The effects of a bad faith claim on a business go well beyond that business's basic financial investment. There’s usually a ripple effect that winds through nearly all aspects of the operation. From a financial standpoint, a baseless denial or delay in processing a claim can slow a business for a cash flow to the point where it can’t make payroll, pay vendor invoices, or meet other obligations. And that’s not all — reputation damage is another consequence of a bad faith refusal to pay a policy. In a service-based industry, failing to pay out on a policy can cause a company to be labeled as unreliable or untrustworthy. 

There are the human consequences of a bogus bad faith refusal to pay as well. Employees are likely to lose hours or lose their jobs altogether, and the owners will suffer stress and anxiety when their business is in jeopardy and they are being deprived of policy limit payouts that are due and paid for. 

Legal Protections for Business Owners

Thankfully, there are avenues for business owners and individuals whom insurance companies won’t pay out on claims to pursue. Simply put, insurance companies are supposed to pay on claims and do so quickly. If they fail, the insured party can file a lawsuit against them for breach of contract or under a statute. Under any applicable standard, the business owner can (and must) hold the company to account and make sure they hold up their end of the bargain. 

Of course, filing a suit based on good faith and fair dealing or a statutory breach where an insurer fails to pay a claim is much easier said than done. The best and only way to pursue a non-paying insurance company is via the courts. An experienced Las Vegas business attorney will be able to help you figure out exactly what a claim is worth and can help determine your best course of action, as well as what sort of claim you have.

Red Flags to Watch For

To protect themselves, business owners should be vigilant about certain warning signs:

• Unreasonable delays in claim processing.
• Repeated requests for unnecessary documentation.
• Denials are based on vague or unfounded reasons.
• Settlements offered significantly below the policy’s value.

Armed with this knowledge of substantiating red flags, business owners can take quick actions to assert and protect their position.

The Attorney’s Role in Combating Bad Faith

A bad faith attorney is able to do much more than advocate for their Las Vegas business clients. They are strategic partners in the battle against bad faith insurance practices. The bad faith lawyer’s role is pivotal in the prohibition and investigation stages of the business owner’s claim, as they are capable of determining whether the insurance provider failed to act in good faith.

The attorney does so by negotiating with the insurance company to achieve a just settlement or by taking the claim before the Las Vegas court system. When a business brings its dispute claims and facts to court, the court is powerful in ensuring that the companies meet their obligations. When the Las Vegas-based insurance company acknowledges that it must follow the court's decisions or face potential penalties, it will lead to efforts to prevent bad faith insurance practices.