Nevada insurance law quick reference guide
March, 2004
By
Andrew B. Downs
BULLIVANT HOUSER BAILEY PC is pleased to inform you that our recently opened Las Vegas office now extends our West Coast legal services to our insurance industry clients and friends with legal issues in Nevada. We hope you will find this guide to legal issues governing insurance claims in Nevada to be a useful resource.
FIRST-PARTY CLAIMS
What is a "claim" under Nevada law?
A claim does not have to be in writing. A claim is any notice by a claimant that reasonably apprises the insurer of the pertinent facts. Notice given to an agent is notice to the insurer. (NAC 686A.645.)
How fast must an insurer respond to a claim, and what information must be provided?
Upon receipt of a claim, an insurer must promptly provide all necessary forms, items, statements, instructions, and necessary "reasonable assistance" within 20 working days. If the insurer is unable to do so, it must at a minimum acknowledge the claim within the 20-day period. An insurer must also reply within 20 working days to any later communication that suggests a response is expected. (NAC 686A.665.)
Once a claim is made, an insurer must fully disclose all pertinent coverages and policy provisions under which the claim is presented. Ideally, these disclosures should be made in the insurer's initial response. (NAC 686A.660.)
How much time is permitted to investigate a claim?
An insurer must begin any necessary investigation within 20 working days after receipt of notice. Once the investigation has begun, the insurer has 30 days in which to complete the investigation and to accept or deny the claim, unless the investigation cannot reasonably be completed within that time. Nevada separately requires an insurer to accept or deny a claim within 30 working days of receipt of properly executed proofs of loss. These separate requirements are inconsistent with each other.
If the insurer cannot complete the investigation in 30 days, or accept or deny a claim within 30 working days after receiving proofs of loss, the insurer must advise the insured or claimant within the 30-day period, in writing, of the status of the claim and the investigation. Such an explanation must be provided within every subsequent 30-day period until the investigation is complete and a decision can be made on the claim. (NAC 686A.670, 686A.675.)
What is required in accepting or denying claims?
All denials must be in writing and accompanied by (a) a statement of any specific policy provisions relied upon, and (b) a reasonable explanation for the decision. If the claim is accepted, payment must be made within 30 days or interest will begin accruing on the payment. Upon payment, the specific coverage under which payment is made should be referenced. (NAC 686A.675; NRS 686A.310(i).)
What constitutes unfair claims practices in Nevada?
Nevada describes unfair claims practices in NRS 686A.310. Engaging in such practices serves as a basis for a civil suit for damages and may lead to action by the Insurance Commissioner. The practices listed in that section include (not a complete list):
- Misrepresenting facts or policy provisions to insureds or claimants;
- Failing to acknowledge and act reasonably promptly upon communications;
- Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims;
- Failing to effectuate prompt, fair and equitable settlements of claims in which an insurer's liability has become reasonably clear;
- Failing, upon payment of a claim, to inform insureds or beneficiaries of the coverage under which payment was made;
- Failing to provide a reasonable explanation for a coverage denial; and
- Misleading an insured or claimant regarding any applicable statute of limitations.
What should an insurer know about releases?
If a whole or partial settlement is made under a specific coverage, the release may not contain language releasing the insurer from broader liability. No release may extend beyond the event that gave rise to the claim payment. A release should also reference the specific coverage under which payment is made. (NAC 686A.660.)
What if a claim is made under an automobile policy?
Special rules apply to claims made under auto policies.
What if an inquiry is made by the Nevada Insurance Division?
Special rules also apply when responding to inquiries from the Nevada Insurance Division or insurance commissioner. If you have questions regarding such inquiries, please contact us.
Is Nevada a "manifestation" state?
Yes, for first-party property insurance claims, Nevada generally uses the "manifestation" trigger.
THIRD-PARTY CLAIMS
How quickly must an insurer respond to a claim or tender?
The time limits pertaining to an insurer's acknowledgement and investigation do not distinguish between first-party and third-party claims. Thus, facially, the same time limits apply to both first-party and third party claims.
As a practical matter, however, an answer to a Nevada state court lawsuit is due within 20 days of service. As such, when a state court case is tendered and an insured is unrepresented, the insurer should move quickly to protect the insured from default β more quickly, in fact, than Nevada's insurance regulations require.
An insurer is required to acknowledge third-party claims within 20 working days of tender and to respond within 30 working days. Any investigation must be completed within those 30 working days. Additional 30- day periods are allowed upon written notice to the insured if the investigation cannot reasonably be completed in that time. Depending on the case, however, these time periods may be too long, and strict adherence may prejudice the insured.
What must be considered in evaluating if a defense should be provided?
In Nevada, an insurer must defend if the complaint arguably or potentially presents a covered claim under the policy. Once triggered, the duty to defend continues throughout the course of the litigation against the insured.
A currently unanswered question in Nevada is whether the duty to defend must be determined solely from the allegations of the complaint or whether extrinsic information may be used to create or destroy a defense obligation.
Does an insurer have a duty to hire independent counsel?
Another currently unanswered issue in Nevada is whether an insurer must provide the insured with the option of independent counsel where there is a possible conflict of interest between the insurer and its insured.
When is the duty to indemnify triggered?
As with most states, the duty to indemnify in Nevada is narrower than the duty to defend. The duty to indemnify arises only in the event of final imposition on the insured of covered, non-excluded liability through judgment or settlement.
Must a claimant be told that a statute of limitations will run?
Yes β where the claimant is not an attorney or represented by an attorney, written notice that an applicable statute of limitations will run must be provided to the claimant at least 60 days before the statute runs. (NAC 686A.675.)
Our licensed Nevada attorneys who provide services to the insurance industry are:
Andrew Downs*
direct: 415.352.2716
The information and articles contained in this newsletter are not intended to provide legal advice or serve as a substitute for consulting with retained legal counsel. Additional information about the attorneys and practice areas of Bullivant Houser Bailey PC may be found at http://www.bullivant.com/.