AB 206 would allow insurers to issue eroding limits liability insurance policies in Nevada

AB 206 (Nev. 2025) aims to repeal NRS 679A.210, which prohibits insurers in Nevada from reducing policy limits by the costs of defense, legal costs, and fees and other expenses for claim, or otherwise limiting the availability of coverage for said costs.

In 2023, the Nevada legislature passed NRS 679A.210. The statute prohibits insurers from issuing or renewing a policy of liability insurance that contains a provision that: 

1. reduces the limit of liability stated in the policy by the costs of defense, legal costs and fees and other expenses for claims; or 
2. otherwise limits the availability of coverage for the costs of defense, legal costs and fees and other expenses for claims.

Since its passage, NRS 679A.210 has drawn persistent criticism from regulators and practitioners alike. In a letter dated July 20, 2023, the Commissioner of Nevada’s Division of Insurance (“DOI”), Scott J. Kipper, declared a Statement of Emergency in response to a bill proposing NRS 679A.210. The Insurance Commissioner’s letter sought clarification regarding the scope of the statutory prohibition. The letter further warned that the DOI had “grave concerns regarding carriers leaving the Nevada market altogether due to the impact of this new legislation.” Despite these concerns, NRS 679A.210 went into effect in October 2023.

Prefiled on February 3, 2025, AB 206 would repeal NRS 679A.210, thereby allowing insurers to issue policies of liability insurance in Nevada that contain eroding limits provisions. This proposed Assembly Bill is but the latest effort to curb the disruptive effects of NRS 679A.210’s blanket statewide prohibition of eroding limits provisions. Notably, AB 206’s introduction marks the first attempt to repeal the statutory prohibition in its entirety.

At the time of this writing, AB 206 has been introduced and referred to the Committee on Commerce and Labor for discussion. At this juncture, there are no hearings or votes scheduled. With just one sponsor, Assemblymember Lisa Cole, who belongs to the minority party, AB 206’s future is uncertain. Whether this bill repealing the statute will ultimately be codified is questionable.

For now, NRS 679A.210 remains the law for admitted insurers. The law does not apply to unauthorized and/or nonadmitted insurers, which by statutory definition exempts surplus lines of insurance. See NRS 685A.039 and NRS 685A.0375. Insurers authorized to engage in the business of insurance in the State of Nevada must continue to refrain from issuing or renewing policies that include eroding limits provisions that reduce the limits of liability stated in the policy by the costs of defense, legal costs and fees, or other expenses for claims.
 

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