Uninsured & Underinsured Drivers

In Nevada, all drivers are required to carry liability insurance. Every auto must be covered by a liability policy to be registered. Liability coverage is invoked when the insured driver causes an accident, and a claim is made by the victim for compensation. If the at-fault insured driver carries the minimum liability coverage in Nevada, $15,000 will be available to the victim to compensate him or her for bodily injuries. $15,000 is the most that can be recovered by a victim for bodily injury under a minimum-limit liability policy, no matter how severe the injury, and only $30,000 can be recovered collectively by all victims, if more than one victim exists (with no one victim recovering more than the $15,000 per-person liability coverage limit).

Insurance companies are required to offer underinsured/uninsured (UM) coverage to all their insureds in the same coverage amounts which they offer for liability coverage. UM coverage applies when the holder of the insurance is injured by an at-fault driver who has no liability insurance (an uninsured motorist) or has insufficient coverage to compensate fully the holder of the UM insurance (an underinsured motorist). UM coverage increases the coverage available to you when you are injured by an at-fault driver. For example, if the at-fault driver carries minimum-limits liability coverage ($15,000), and you carry UM limits of $15,000, then up to $30,000 is available to compensate you for injuries. Similarly, if the at-fault driver is completely uninsured, you can recover up to $15,000 under your UM policy, or more if you purchase greater coverage.

UM coverage can be declined by the insurance applicant when a policy is purchased. A great percentage of drivers in Nevada decline UM coverage to save money. This is unfortunate because many drivers in Nevada are either uninsured or underinsured. Many drivers believe that they have UM coverage because they have been told they have “full coverage.” Usually this term is used to indicate that an insured has liability and collision coverage, but the term is not often used to include UM coverage. Also, many insureds remember signing numerous documents when they purchased insurance but do not actually recall what the documents were. They are often surprised, months or years later, when they find out one of those documents was a letter declining UM coverage.

Our advice is to call your insurance agent or go online to determine whether you have UM coverage. You may be surprised. If you do not have UM coverage, purchase some before an accident occurs, when it is too late. If no coverage exists, an investigation can be performed to determine whether the at-fault driver has other personal assets to compensate you for your loss. Most often, however, an insurance policy is the only asset available, and if the at-fault driver is uninsured, it is unlikely that he or she has significant personal assets.

Also, when you drive with UM coverage, your policy will usually cover not only you but also your passengers. And when you or your passengers make a claim on your policy for UM coverage, Nevada law prevents your insurance company from raising your rates as a result. With regard to your vehicle, we also recommend purchasing gap insurance--your insurance carrier, not your automobile dealer--if your vehicle is financed. Gap insurance pays the difference between what you owe on the car loan and what you can recover from the at-fault party if your vehicle is declared a total loss. You can recover from the at-fault party only the cash value of the total loss, narrowly defined, not the cost to replace your vehicle or the amount you still owe. The cash value of your vehicle can be significantly less than the amount you owe on your loan (which you remain obligated to pay).