In 2017, Nevada passed a law that increased auto insurance liability limits. Drivers will now be required to carry $25,000 per person and $50,000 per accident of bodily injury coverage, plus $20,000 for property damage.
The bill, which takes effect July 1, nearly doubles the coverage previously required and also mandates insurers offer minimum uninsured/underinsured motorist coverage options that match the minimum liability limits.
As one of the last 10 states with minimum bodily injury limits under 25/50, the new law brings Nevada in line with requirements that many other states have already instituted.
What Are the Benefits to Motorists?
While the increase in liability insurance requirements may be frowned upon by some Nevada drivers, the change is being implemented because cars and medical care cost more today than they did in 1958, when the original minimum limits were implemented.
Nevada motorists can feel more confident on the road with the increased requirements. Drivers have more coverage to pay expenses if they are found at fault for an auto accident. And they will also have access to more coverage if they are injured in an accident caused by another driver.
What Are the Downsides for Drivers?
With increased auto insurance limits, drivers can also expect an increase in rates. The first group of drivers impacted will be those who carry the current state minimum limits of 15/30/10. Currently, an estimated 600,000 Nevada drivers carry state minimum limits. With the change, these drivers are expected to see an increase of about 9 percent in their auto insurance premiums.
In many cases, individuals who carry minimum limits do so because it is all they can afford. A 9 percent jump can cost drivers an additional $10 on their monthly premiums or approximately $120 per year. Drivers who elect to carry optional uninsured/underinsured coverage are expected to see a more significant increase of $45 per month or $540 per year.
The change may impact all Nevada drivers over time. With the increase in premiums, some drivers may elect to skip optional coverages such as uninsured/underinsured motorist liability to save a few dollars. If a driver skips this type of coverage and is involved in an auto accident with an uninsured driver, they can expect to pay more out of pocket for medical and property damage costs.
Not only are insurance carriers taking on more risk in regards to increased policy limit amounts, they could see a large increase in claim amounts and the number of claims paid out as a result. The cost of claims is passed on to customers as higher rates, resulting in increased premiums for policyholders. While the impact of this may not be seen immediately, drivers should prepare for this possibility now, as some parts of Nevada have already seen rate increases in recent years exceeding the national average.
How Are Industry Groups Responding?
Industry groups, including the American Insurance Association, The National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America, voiced their opposition at a Nevada Senate Committee on Transportation meeting in March 2017. During the meeting, Jeannette K. Belz said, "This bill unnecessarily increases automobile insurance premiums on people who cannot afford it and will lead to more uninsured Nevada drivers."
The new law will impact insurance carriers, but the details are unknown. It may benefit insurers—or it may hurt insurers' revenue by increasing the amount of claims paid out or forcing consumers into forgoing insurance. Some insurance carriers already filed their policy changes with the state and received approval, meaning policyholders are seeing the changes take effect on their renewals.
With three months left until the law takes effect, Nevada drivers should start preparing for the change now. Contact your insurance carrier for updated pricing, and compare quotes from several carriers to make sure you have the right coverage at a price that matches your budget.
Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.
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