by: Nadia I. Gire
The 82nd session and 35th special session of the Nevada Legislature made a significant amendment during its latest legislative session, bringing about a noteworthy change. Insurance contracts in Nevada are governed by the Nevada Insurance Code. Amendment No. 288 to Bill No. 398 now prohibits insurers from issuing or renewing liability insurance policies that contain specific provisions regarding the reduction of liability limitations.
This amendment has far-reaching implications for insurers, particularly regarding coverage for contractual indemnitees. Insurers should carefully review their policy language, while insured parties should remain attentive for any additional guidance.
Amendment Details:
Previously, Section 1. Chapter 679A of NRS authorized the costs of defense, legal costs and fees and other expenses for claims to be applied to the deductible. Now, this section is amended by adding that an insurer shall not issue or renew a policy of liability insurance that contains a provision that:
- Reduces the limit of liability stated in the policy by the costs of defense, legal costs and fees and other expenses for claims; or
- Otherwise limits the availability of coverage for the costs of defense, legal costs and fees and other expenses for claims.
Transition Period:
Section 2 of the amendment clarifies that the new provisions do not apply to liability insurance contracts existing before October 1, 2023. However, these provisions will apply to any renewals of such contracts.
Impact and Implications:
The amendment discussed above will significantly impact insurers’ operations. In light of this change, insurers should consider revising their policy language to ensure compliance and stay vigilant for any further guidance that may be issued on this matter.
