Posted on January 9, 2015
In Nevada, although an individual is expressly excluded as a driver in an insurance policy, if the excluded individual drives the car with the owner’s permission, the insurance company must cover at least the statutorily required minimum coverage.
Pursuant to Nevada Revised Statute 485.3091, an insurance policy for motor vehicles must provide the statutory minimum coverage for both owner and any person who uses the vehicle. In Federated American Ins. Co. v. Granillo (1992) 108 Nev.560, the insured’s son was expressly excluded in the insurance policy. The owner chose to exclude his son so that he could obtain a cheaper premium. If his son was included, the premium would be double.
The Court determined that the insurance company was required to reimburse for the injuries caused by the insured’s son. Specifically, the Court cited to Nevada Revised Statute 485.3091(1) which states liability insurance must insure the named person and any individual using the vehicle with the “express or implied permission of the named insured.” The coverage must insure “against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle.” The Court so reasoned due to Nevada having a “strong public policy interest in assuring that individuals who are injured in motor vehicle accidents have a source of indemnification.” Further, Nevada’s “financial responsibility law reflects Nevada’s interest in providing at least minimum levels of financial protection to accident victims.” The Court concluded that in Nevada, an insurance company is required to cover “all persons who drive an insured’s car with the insured’s permission regardless of whether the permissive driver has been explicitly excluded from coverage.”
However, a policy containing exclusions is valid if the policy covered an out of state resident, provided that the exclusion was valid in the applicable state where the policy was written. In Progressive Gulf Ins. Co. v. Faehnrich, (2014) 327 P.3d 1061 a mother and her minor children, new residents of Nevada, were in an accident injuring the minor children. The vehicle still carried Mississippi registration, license plates and the mother had a Mississippi driver’s license.
The insurance policy excluded coverage of bodily injury to any “person residing in the same household as [insured], and related through blood, marriage or adoption.” The Court reasoned that if the policy was delivered “in Nevada, to a Nevada resident owning a car principally garaged in Nevada, then-existing case law would have invalidated the household exclusion to the extent it eliminated the statutorily mandated . . . minimum coverage.” Here, the exclusion was valid because Mississippi law had the strongest ties to the transaction and the policy was applied for, delivered and renewed in Mississippi by Mississippi residents. The Court concluded that Nevada’s public policy does not preclude giving effect to a choice-of-law provision in an insurance contract that was negotiated, executed, and delivered while the parties resided outside of Nevada.