The Advocate, Journal of the Nevada Trial Lawyers Association, April 2008.

If you have been doing auto insurance claims for any length of time, you have encountered the following situation on numerous occasions.

Johnny, the 24 year old ne’er-do-well son, is once again living at his parents’ house after his most recent failed job attempt. While out and about with his homeboys one Friday night, he is a passenger in his friend’s car, which is totaled out by a drunk driver.

The first problem is that the drunk driver has no insurance. The second problem is that his friend, in whose car Johnny was riding, has liability-only insurance. However, you find out from Johnny that his parents, with whom Johnny resides, have very excellent uninsured motorist and medical payments benefits. Johnny can make a claim against his parents’ uninsured motorist and med pay benefits, and things should work out just fine.

Johnny then looks down at the ground and mumbles something along the lines of "I don’t think that’s such a good idea. I don’t think my dad is going to like that." You guess that Johnny has already cost his father a lot of money over the last few years for various things, and the last thing dad wants is to have his auto insurance rates go up for something like this. And the last thing Johnny wants is to irritate dad, who may boot him out of the house.

You tell Johnny that, no problem, in Nevada, they can’t make dad’s rates so up for making an uninsured motorist or med pay claim. Johnny looks down at the ground and mumbles, "I don’t know. Dad’s not going to like that." You then suggest that you can call dad and assure him that his rates won’t go up. Johnny brightens a little and says, "Okay, go ahead and try it."

I don’t know what reaction you have had from "dad" in these sorts of situations, but I would say that I am batting 1,000 in getting extremely negative responses. Explain as you might that the rates won’t go up, but it is hard for dad to believe that (actually, "dad" usually expresses his feelings quite strongly, and demands that I give the phone over to "Johnny" so he can provide some father-son advice.)

Recently, I researched the statute and administrative code sections so that I could show them to "dad" (and also to dad’s insurance agent, who was behind the scenes egging "dad" on in his refusal to allow a claim to be made.)

NRS 687B.385 states in relevant part: "An insurer shall not cancel, refuse to renew or increase the premium for renewal of a policy of motor vehicle insurance covering private passenger cars . . . as a result of any claims made under the policy with respect to which the insured was not at fault."

There is an accompanying Nevada Administrative Code Section, NAC687B.850 which states, "An insurer shall not cancel, refuse to renew or increase the premium charge for the liability coverage under a policy of motor vehicle insurance upon renewal of the policy of motor vehicle insurance because of an accident that is not a ‘chargeable accident.’ . . . the insurer’s definition of a ‘chargeable accident’ may include only those accidents for which the insured is 50% or more at fault . . . an insurer may not define a claim made under the comprehensive portion of a policy of motor vehicle insurance as a "chargeable accident’ in order to increase the premium for the policy or to cancel the policy, but the insurer may use a series of such claims to discontinue comprehensive coverage or to offer a higher deductible for comprehensive coverage . . . ."

(A "comprehensive coverage" claim is one which involves a stolen car or broken glass on the car.)

There are two cases in Nevada construing the Statute. In Reinkemeyer v. Safeco Insurance, 16 P.3d 1069 (2001), the Nevada Supreme Court stated that the statute is not unconstitutional (Safeco tried to argue that the Statute amounted to an unconstitutional taking of property from them.)

In the case of State Farm v. Commissioner of Insurance, 958 P.2d 733 (1998), the issue was whether the Insurance Commissioner’s Office could lawfully promulgate the Administrate Code section which defined "at fault" as meaning "more than 50%" vs. just exactly 50% (it could not, apparently.)

The most typical questions that clients have concern whether or not making a med pay claim or an uninsured motorist claim will make their rates go up. The answer to that is clearly "No." I would also state that a collision loss claim (wherein there is no question of your client being at fault in any way) should also not be the basis of raising any rates.

Moreover, the insurance company cannot non-renew the policy or increase the premium for renewal on account of the accident. (This would also seem to include the insurance companies who try to get around the statute by refusing to send a claimant their premium "rebate" when a non-fault claim is made. I would argue that, similarly, an insurance company that in effect raises the rate by taking away the "accident-free discount" for the making of a non-fault claim is violating the statute.)

I have, on many occasions over the years, received telephone calls from angry clients or fathers of clients to the effect that "I thought you told me my rates weren’t going to go up. I just got my new bill for insurance, and they are increasing me by $50 a month! " Every time I have received one of these calls, when I ask the caller, "Did they actually tell you it was because of the accident claim?", the answer is "Well, no. I just figured . . . ." And then, when they later on check out why the rate was increased, they find out, typically, that it is part of an across-the-board increase.

Unfortunately for consumers, NRS 687B.385 applies only to automobile policies. It previously applied to homeowners’ policies, but the statute was amended in 1997 to limit it to only auto policies.