Nebraska Claims Compliance

and Hanson v. McCawley (2016), Nebraska courts held that insurance agents have no proactive duty to anticipate what coverage an insured needs or to explain unambiguous policy terms unless the insured specifically requests such coverage .

permanently foreclosing the availability of punitive damages for insurance bad faith in Nebraska . Consequently, commercial auto insurers operating in Nebraska face no punitive damage exposure, fundamentally limiting the financial risk of extracontractual litigation compared to neighboring states .

the Nebraska Supreme Court adopted a widely recognized exception: "when an insurance company assumes the defense of an action against its insured, without reservation of rights, and with knowledge, actual or presumed, of facts which would have permitted it to deny coverage, it may be estopped from subsequently raising the defense of non-coverage" .

. The standard is not strict liability, nor is it a pure negligence standard like the Stowers doctrine in Texas. Instead, Nebraska requires actual bad faith .

the Nebraska Supreme Court established that an insurer can be liable for bad faith failure to settle a third-party claim . The court adopted a multi-factor test to determine if an insurer acted in bad faith, placing primary emphasis on communication. The first and most critical factor is:

Nebraska courts held that insurance agents have no proactive duty to anticipate what coverage an insured needs or to explain unambiguous policy terms unless the insured specifically requests such coverage .

the Nebraska Supreme Court held that when an insurer issues a reservation of rights, the insurer cannot insist on retaining control of the insured's defense . If the insured objects to being defended under a reservation of rights, the insured may reject the insurer's defense and "take over the defense itself" .

if an insurer demonstrates that the validity of the claim was "fairly debatable" or subject to a "reasonable dispute" regarding the facts or the law, the insurer cannot be held liable for bad faith . The court decides this as a matter of law based on the information available to the insurer at the time the claim was presented .

requires the insured to prove: (1) the absence of a reasonable basis for denial of coverage, and (2) the insurer's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim . In this context, bad faith is characterized by an intentional or reckless failure to investigate a claim properly or the manufacture of a debatable reason to deny a claim .

the Nebraska Supreme Court held that a third-party assignee cannot make a direct bad faith claim against an insurer, as the implied covenant of good faith and fair dealing is reserved for the contractual relationship between the policyholder and the insurer .

the Nebraska Supreme Court declined to find that an insurance intermediary had a fiduciary duty to proactively disclose unresolved or pending claims activity to a surety absent a specific agency requirement . Similarly, in Dahlke v. John F. Zimmer Ins. Agency (1994) and Hanson v.

and Hadenfeldt v. State Farm Mut. Auto. Ins. Co. (1976), the Nebraska Supreme Court addressed the insurer's duties when handling third-party claims . When an insurer takes exclusive control over settlement negotiations, it assumes a fiduciary-like position toward the insured .

and Williams v. Allstate Indem. Co. (2003), the court held that an insurance company has a right to debate a claim that is "fairly debatable" or subject to a reasonable dispute . If the insurer has an arguable basis to deny or delay the claim at the time the decision is made, the bad faith cause of action fails as a matter of law, regardless of how thoroughly the insurer investigated the claim .

the Nebraska Supreme Court acknowledged that the tort of bad faith "embraces any number of bad faith settlement tactics, such as inadequate investigation, delays in settlement, false accusations, and so forth" .

and LeRette v. Am. Med. Sec., Inc. (2005), if an insurer demonstrates that the validity of the claim was "fairly debatable" or subject to a "reasonable dispute" regarding the facts or the law, the insurer cannot be held liable for bad faith . The court decides this as a matter of law based on the information available to the insurer at the time the claim was presented .