When you’re dealing with an insurance claim after an accident, it’s easy to assume the insurance company has the same legal duties to everyone involved.
In Nevada, that’s not how it works.
Whether an insurer owes you strong “good faith” duties often depends on one key question: Are you the insurance company’s own customer (a first-party insured), or are you making a claim against someone else’s policy (a third-party claimant)?
This post breaks down the difference in plain English—and why it matters.
First-party vs. third-party: the simplest way to think about it
First-party claim (you vs. your own insurer)
A first-party claim is when you seek benefits under your own insurance policy. Examples include:
- Uninsured/underinsured motorist (UM/UIM) claims under your policy
- MedPay claims
- Property damage claims under your own coverage (depending on the policy)
Here, you have a contract with the insurer. That contract relationship is a big deal under Nevada law.
Third-party claim (you vs. the other driver’s insurer)
A third-party claim is when you pursue compensation from someone else’s insurance company—typically the at-fault driver’s liability insurer.
In that situation, you are not the insurance company’s customer, and you generally do not have a contract with them.
Why the contract relationship matters: “good faith” duties
Nevada recognizes an implied covenant of good faith and fair dealing in every contract. See, Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 109 Nev. 1043, 1046, 862 P.2d 1207, 1209 (1993).
First-party: strong duties run directly to the insured
In a first-party claim, the insurer’s duties run to its insured because the relationship is contractual.
Nevada’s Supreme Court has explained that an insurer fails to act in good faith when it refuses “without proper cause” to compensate the insured for a loss covered by the policy. Pemberton v. Farmers Ins. Exch., 109 Nev. 789, 792–93, 858 P.2d 380, 382 (1993).
And when bad faith is alleged, Nevada cases commonly frame the proof in terms of whether the insurer lacked a reasonable basis and knew or recklessly disregarded that lack of a reasonable basis. See Powers v. United Servs. Auto. Ass’n, 114 Nev. 690, 702–03, 962 P.2d 596, 604 (1998).
So if your own insurer unreasonably denies, delays, or underpays benefits that should be covered, Nevada law may provide meaningful remedies—because the duty is owed to you.
Third-party claims: generally no standing for bad faith
With third-party claims, Nevada’s reported authority draws a hard line:
Third-party claimants do not have a contractual relationship with insurers and thus have no standing to claim bad faith. Torres v. Nev. Direct Ins. Co., 131 Nev. 531, 541, 353 P.3d 1203, 1210 (2015) (citing Gunny v. Allstate Ins. Co., 108 Nev. 344, 345, 830 P.2d 1335, 1335–36 (1992)).
That’s the core reason third-party “bad faith” lawsuits are generally rejected in Nevada: without a contract, there’s no implied covenant running from the insurer to the injured person.
Practically, this means the other driver’s insurer may have incentives that don’t align with yours—and Nevada law typically does not treat you as someone who can sue them for “bad faith” in the same way their insured could.
What about Nevada’s “absolute liability” statute for auto policies?
Some people hear that Nevada has an “absolute liability” rule for motor vehicle policies and assume it creates extra rights for injured third parties.
Nevada’s motor vehicle liability policy statute provides (in part) that the insurer’s liability becomes “absolute” whenever covered injury or damage occurs, and that certain statements by the insured or policy violations do not defeat or void the policy. See NRS 485.3091.
But Nevada authority rejects the leap from “absolute liability” to third-party bad-faith standing.
In Torres, the Nevada Supreme Court explained that while it had previously suggested in dicta that an intended beneficiary might have a sufficient relationship, “nothing in Nevada’s absolute-liability statute creates a contractual relationship between an insurer and a third party for bad faith.” Torres, 131 Nev. at 541, 353 P.3d at 1210.
Unpublished Nevada decisions have echoed the same point. See, e.g., Nev. Checker Cab Corp. v. Eighth Judicial Dist. Court of Nev., 2016 Nev. Unpub. LEXIS 497 (Feb. 3, 2016).
So while the statute can limit certain defenses after an accident, it does not convert an injured person into the insurer’s contractual partner for purposes of a bad-faith claim.
Nevada’s Unfair Claims Practices Act: who can sue?
Nevada also has statutory rules for claims handling under the Unfair Claims Practices Act.
For example, NRS 686A.310(1)(e) identifies as an unfair practice failing to effectuate “prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.”
But the private right of action is framed as insured-only.
The Nevada Supreme Court has explained that historically NRS 686A.310 contained no private right of action, but the Legislature amended it in 1987 to provide a private cause of action for the insured: “an insurer is liable to its insured for any damages sustained by the insured as a result of an unfair practice.” UnitedHealthCare Ins. Co. v. Fremont Emergency Servs. (Mandavia), Ltd., 570 P.3d 107 (Nev. 2025) (discussing NRS 686A.310(2) (1987)).
Federal authority applying Nevada law has likewise noted that NRS 686A.310 expressly grants insureds a private right of action, but does not provide a private right of action to third-party claimants. See Turk v. TIG Ins. Co., 616 F. Supp. 2d 1044, 1052 (D. Nev. 2009).
What this means in real life (and what you can do)
If you’re injured in a Nevada accident, the “first-party vs. third-party” distinction affects the leverage and legal tools available.
A few practical takeaways:
- Don’t assume the other driver’s insurer owes you the same duties it owes its own policyholder. Torres, 131 Nev. at 541, 353 P.3d at 1210.
- If you have UM/UIM coverage, your own policy may become a major part of the case. That can shift the claim into a first-party framework with different duties.
- Delays and low offers are common. Understanding who owes what duty helps you respond strategically.
Bottom line
Under Nevada law reflected in the authorities above, the dividing line is the contract relationship.
- In first-party claims, insurer duties run to the insured through contract, including the implied covenant of good faith and fair dealing. See Hilton Hotels, 109 Nev. at 1046, 862 P.2d at 1209; Pemberton, 109 Nev. at 792–93, 858 P.2d at 382.
- Nevada recognizes bad faith where the insurer refuses without proper cause to pay covered benefits. Pemberton, 109 Nev. at 792–93, 858 P.2d at 382.
- In third-party claims, Nevada authority states third-party claimants generally lack a contractual relationship with the insurer and therefore lack standing to sue for bad faith. Torres, 131 Nev. at 541, 353 P.3d at 1210; Gunny, 108 Nev. at 345, 830 P.2d at 1335–36.
- Nevada’s auto “absolute liability” statute does not create the contractual relationship needed for third-party bad-faith standing. Torres, 131 Nev. at 541, 353 P.3d at 1210; see also NRS 485.3091.
- NRS 686A.310 sets unfair claims practices standards, and Nevada authority describes the private right of action as belonging to the insured. Mandavia, 570 P.3d 107; Turk, 616 F. Supp. 2d at 1052.
Disclaimer: This is information only, not legal advice.
If you were injured in an accident in Nevada and you’re dealing with an insurance claim, call the personal injury lawyers at Cap & Kudler at 702-878-8778 for a free consultation with an attorney.
