Not long ago, Nevada’s governor signed into law Nevada Rev. Stat. § 679A, which provides that, effective October 1, 2023, insurers are prohibited from issuing or renewing liability policies, to Nevada residents, that reduce the limits of liability by the amount of defense costs and expenses paid. In other words, “eroding” or “wasting” policies are not allowed.  [Which insurers are subject to the new law is an issue that is still the subject of discussion, as noted below.]

The new law has caused upheaval in the Silver State, with concerns that insurers will exit the market for policies that are usually “defense within limits” -- such as professional liability as a significant one -- or premiums will rise appreciably. 

There has been a lot of activity out of the Nevada Division of Insurance to deal with the law’s concerns and its implementation.  Putting aside some of the recent things, the latest development is that the state’s insurance division is considering the adoption of regulations pertaining to the law.  A public hearing is scheduled for September 12 to solicit comments from interested persons on the proposed regulations.

For those interested in this issue, the below link offers a trove of information, including the background of the law, concerns raised and proposed regulations.  There is also a link to attend the upcoming hearing via Webex.     

https://doi.nv.gov/uploadedFiles/doi.nv.gov/Content/News_and_Notices/20230808_REG_R029-23_HRG_Notice_ADA_V2.pdf

The Nevada Division of Insurance summarizes the purpose of the proposed regulations as follows: 1) defines what is a “policy of liability insurance,” 2) identifies the insurers to which AB 398 does not apply based on existing state and federal law, and 3) provides further guidance on how defense coverage is required to be made available.

For those who really want to get into the weeks, the terms of the proposed regulation are set out at the above link.