Nevada Governor Joe Lombardo has signed into law AB 398, which modifies Nevada Insurance Code Title 57. According to the new law, Nevada insurers will not be able to issue or renew a liability policy that contains language that reduces the policy limit by “costs for defense, legal fees, and other expenses related to claims” (or limits the coverage).
This new law, in essence, removes attorney’s fees and other expenses that are usually included on insurance policies. It also eliminates the provisions which “burn” or “erode” the policy limits of insureds.
AB 398 may have an impact on attorney malpractice insurance because some carriers design their policies so that they include policy limits for “burning” and “eroding”. However, most do not. In general, premiums for “burning” and “eroding”, or “eroding”, policy limits are lower, so they are attractive to insureds who are cost-conscious.
Nevada attorneys should consult their insurance brokers to find out if they will be affected. AlPS, the State Bar of Nevada-endorsed lawyer’s professional liability insurer, and other legal malpractice insurance carriers in Nevada are expected to work closely with insureds to maintain coverage.