Supplements to Auto Insurance and Nevada Law

Most folks¹⁾that drive are familiar with how automobile insurance works.  Of those folks, less are familiar with the mechanics of the supplemental offerings, underinsured and uninsured motorist protection and MedPay. The law in Nevada treats uninsured and underinsured motorist protection in a similar manner, but applies a distinction²⁾with a difference for MedPay.  This post will discuss what these types of supplemental insurances are, and how the law treats them differently.

 

A few insurance definitions

What is underinsured motorist (UIM) protection?

A supplemental option to your liability policy that insures you if you the victim of an automobile accident, and the perpetrator does not have a sufficient amount of insurance to cover the costs of your damages. Many policies cover the driver and members of the driver's household whether they are in the primary automobile or in the automobile of another.  The terms of the UIM policy differ between companies, and as you will see, it is imperative that you read your policy carefully.

 

What is uninsured motorist (UM) protection?

Similar to UIM, only it insures you in case the perpetrator does not have any insurance at all to cover the costs of your injuries.

 

What is MedPay?

Known as auto medical payments insurance, it is an insurance extension that pays for medical expenses³⁾the amount is capped if you or household member is injured in an automobile accident. Depending the specifics of the policy⁴⁾again, make sure to read it carefully! it may cover you and household members while in other vehicles, while riding public transportation, and even when walking.

 

Nevada law and the above insurance supplements

And you thought these supplemental insurance concepts were simple, eh? Well it is time to go spelunking in the Nevada Revised Statutes (NRS); as it turns out, insurance companies are required by law to offer UIM, UM, and MedPay:

NRS 687B.145  

      2.  Except as otherwise provided in subsection 5, insurance companies transacting motor vehicle insurance in this State must offer, on a form approved by the Commissioner, uninsured and underinsured vehicle coverage in an amount equal to the limits of coverage for bodily injury sold to an insured under a policy of insurance covering the use of a passenger car. The insurer is not required to reoffer the coverage to the insured in any replacement, reinstatement, substitute or amended policy, but the insured may purchase the coverage by requesting it in writing from the insurer. Each renewal must include a copy of the form offering such coverage. Uninsured and underinsured vehicle coverage must include a provision which enables the insured to recover up to the limits of the insured’s own coverage any amount of damages for bodily injury from the insured’s insurer which the insured is legally entitled to recover from the owner or operator of the other vehicle to the extent that those damages exceed the limits of the coverage for bodily injury carried by that owner or operator. If an insured suffers actual damages subject to the limitation of liability provided pursuant to NRS 41.035, underinsured vehicle coverage must include a provision which enables the insured to recover up to the limits of the insured’s own coverage any amount of damages for bodily injury from the insured’s insurer for the actual damages suffered by the insured that exceed that limitation of liability.

 3.  An insurance company transacting motor vehicle insurance in this State must offer an insured under a policy covering the use of a passenger car, the option of purchasing coverage in an amount of at least $1,000 for the payment of reasonable and necessary medical expenses resulting from an accident. The offer must be made on a form approved by the Commissioner. The insurer is not required to reoffer the coverage to the insured in any replacement, reinstatement, substitute or amended policy, but the insured may purchase the coverage by requesting it in writing from the insurer. Each renewal must include a copy of the form offering such coverage. (emphasis added)

 

So it is clear⁵⁾once we whack our way through all that verbiage that insurance companies must provide an option to Nevada residents to purchase UIM, UM and MedPay supplements to their automobile insurance coverage.  But are there requirements as to how insurance consumers must decline the supplemental coverage? NRS 690B.020 provides guidance in reference to UIM and UM:

 NRS 690B.020  

      1.  Except as otherwise provided in this section and NRS 690B.035, no policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this State unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, resulting from the ownership, maintenance or use of the uninsured or hit-and-run motor vehicle. No such coverage is required in or supplemental to a policy issued to the State of Nevada or any political subdivision thereof, or where rejected in writing, on a form furnished by the insurer describing the coverage being rejected, by an insured named therein, or upon any renewal of such a policy unless the coverage is then requested in writing by the named insured. The coverage required in this section may be referred to as “uninsured vehicle coverage.” (emphasis added)

      2.  The amount of coverage to be provided must be not less than the minimum limits for liability insurance for bodily injury provided for under chapter 485 of NRS, but may be in an amount not to exceed the coverage for bodily injury purchased by the policyholder.

 

Ok, UIM and UM policy supplements must be rejected in writing. Additionally, the amount of under-insurance “must not by less than the minimum amounts for liability insurance.” NRS 485.185 provides instruction as to what those amounts are:

 NRS 485.185     

Every owner of a motor vehicle which is registered or required to be registered in this State shall continuously provide, while the motor vehicle is present or registered in this State, insurance provided by an insurance company licensed by the Division of Insurance of the Department of Business and Industry and approved to do business in this State:

      1.  In the amount of $15,000 for bodily injury to or death of one person in any one accident;

      2.  Subject to the limit for one person, in the amount of $30,000 for bodily injury to or death of two or more persons in any one accident; and

      3.  In the amount of $10,000 for injury to or destruction of property of others in any one accident, for the payment of tort liabilities arising from the maintenance or use of the motor vehicle. (Added to NRS by 1979, 1820; A 1981, 1862; 1987, 1090; 1993, 2484; 1995, 2734; 2007, 2049) (emphasis added)

 

So we know that the NRS requires insurance companies to offer UIM, UM and MedPay.  We also know that a customer must reject UIM and UM in expressly in writing, while the statute is silent on how MedPay is to be declined.  Additionally, we know there are statutory minimums for the amount of UIM and UM to be offered⁶⁾$15,000 for an individual, $30,000 for two or more persons.

Yet there are more ambiguities to be clarified.  If an insurance company does not have a written declination for MedPay, do they have to pay out under NRS 687B.145? What happens if you have a six-figure UIM policy, but the insurance company includes a non-occupancy exclusion as a term, and you are in an accident while riding in the vehicle of another. Will you be able to recover anything? We will need to examine case law to get clarification.

 

Wingco v. Gov’t Employees Ins. Co. (GEICO)

Wingco determines if a written rejection is necessary for a MedPay policy:

By its terms, NRS 687B.145(3) requires Nevada motor vehicle insurers to offer insureds the option of purchasing medical payment or "medpay" coverage in the amount of at least $1,000. But the statute does not state that the insurer must obtain a written rejection of this coverage. For Wingco to prevail, this court would have to read a written rejection requirement into NRS 687B.145(3) that it does not expressly include⁷⁾Wingco v. Gov't Emps. Ins. Co., 130 Nev. Adv. Op. No. 20 . Mar 27, 2014, page 4. Read the case here

The court goes on to state that because the statute is unambiguous, it is improper to read the written requirement of rejection into the statute⁸⁾if the legislature desired insurance companies to obtain a written rejection for MedPay, the statute would say so explicitly.  Because no written evidence is required, the issue of if a consumer was offered MedPay will be one ‘of fact,’ meaning at trial, each side would need to present evidence proving that MedPay was or was not offered⁹⁾a fairly expensive option to obtain the statutory minimum of $1,000.

 

Continental Insurance Co. v. Murphy

A written rejection of UIM is necessary per NRS 690B.020(1). In Cont'l Ins. Co. v. Murphy,¹⁰⁾120 Nev. 506, 511, 96 P.3d 747, 751 (2004). Read the case here, the Nevada Supreme Court reaffirmed that a 1st Party Carrier must have a written rejection in order to deny coverage. In that case, the Plaintiff had a $300,000 UIM policy, but was injured while not occupying an insured vehicle. Continental Insurance had a non-occupancy exclusion as part of the UIM policy and denied they had to pay anything. The Nevada Supreme Court held:

(1) There must be a written waiver of UIM, so there non-occupancy exclusion was invalid,

(2) Nevada public policy only requires minimum coverage as determined by the statute.

So while the non-occupancy clause was invalid, it was only invalid as to the minimum coverage. Thus, on a $300,000 UIM policy with a non-occupancy exclusion and no written waiver, the 1st party carrier must provide at least $15,000 in coverage.

So, one last time, it is imperative to read your insurance policy.  The poor folks in the case above thought their $300,000 of UIM followed them no matter how they traveled, but learned that hard way that it was not the case.