The case of Progressive Gulf Insurance Company v. Faehnrich outlines what might happen when drivers with out of state insurance policies seek to take advantage of advantageous aspects of Nevada’s insurance laws which conflict with their own state’s.
A family obtained an insurance policy in Mississippi, and listed Mississippi as their residence. When the couple divorced, the wife moved to Nevada with the children but maintained her Mississippi insurance policy. Shortly after moving, the mother and two sons were involved in a single car accident, where both sons were injured. The Mississippi policy contained a “household exclusion” which eliminated any coverage that could be awarded to the boys for their claims against their mother.
Nevada insurance policies cannot have a household exclusion, and an exclusion of this nature is said to violate Nevada’s public policy. The issue to be decided was whether the state of Nevada would uphold an exclusion permitted by another state, which in this case caused harm to Nevada residents, when that exclusion is clearly contrary to the policy in Nevada.
The Nevada Supreme Court analyzed all of the relevant facts, including the fact that the car involved in the accident still had Mississippi plates and the mother had a Mississippi driver’s license. Although the Court did not doubt that they intended to become Nevada residents, it appeared that because the car had not yet been registered in Nevada, the Court did not yet feel that the family was subject to Nevada’s mandatory insurance laws at the time of the accident. Accordingly, because the policy was purchased in Mississippi and the risk of an accident was contemplated there, the Court upheld the Mississippi exclusion. As such, the sons could not recover any insurance money.
This case should serve as a cautionary tale to parties driving through Nevada who are involved in accidents or parties who have recently moved to Nevada. The simple fact of being involved in an accident in Nevada will not allow them to take advantage of Nevada’s favorable insurance laws because the laws of the state where their insurance policy was purchased will remain in place.
If you or someone you know is injured in an accident in Nevada, contact our experienced personal injury attorneys at Clear Counsel Law Group to receive the highest possible settlement.
 2014 WL 1258808, published citation forthcoming.