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Nevada’s Compulsory Auto Insurance Law and Nevada’s Financial Responsibility Law Working Hand In Hand

Nevada’s Compulsory Auto Insurance LawIn the area of Nevada automobile insurance coverage, there are regular references to the Nevada’s Compulsory Automobile Insurance Law, N.R.S. 485.185 – 485.187, and its Financial Responsibility Law, N.R.S. 485.190 – 485.420.  In answering coverage questions, it is important to understand the purpose of each of these laws and to differentiate between the effects of that these laws have.  The case of State of Nev., Dep’t of Motor Vehicles v. Lawlor, 101 Nev. 616, 707 P.2d 1140 (1985) does a good job of discussing the details of these issues.

Nevada’s Compulsory Insurance Law, N.R.S. 485.185 – 485.187, requires the owner of a motor vehicle which is or should be registered in Nevada to continuously maintain insurance, self-insurance or security sufficient to satisfy tort liability from the maintenance or use of motor vehicles.  This is the law that requires a vehicle owner to show proof of Nevada insurance at the time that he or she presents the car for registration for the first time to Nevada’s DMV.  Nevada registration of an out-of-state vehicle must occur within 60 days of the owner becoming a resident or at the time that the owner gets a Nevada driver’s license.  N.R.S. 482.385(3).  It would be improper to say that this law requires every driver on Nevada’s highways to have insurance.  For example, a California driver that causes an accident while travelling through Nevada in an uninsured car that was registered in California would not violate Nevada’s Compulsory Insurance Law.  But that does not mean that the driver would get off scot-free.

Nevada’s Financial Responsibility Law, N.R.S. 485.190 – 485.420, can be distinguished from the Compulsory Insurance Law.  This law is triggered only when an uninsured driver is involved in an accident in which damages exceed $750.00.  Unlike the Compulsory Insurance Law, the Financial Responsibility Law applies to anyone driving on Nevada’s streets, whether they are Nevada residents or not.  The effects of the Financial Liability Law are two-fold.  First, the uninsured driver must within 20 days of the accident either 1) secure a release of damages, 2) get a written agreement to pay the damaged driver in installments or 3) obtain a final judgment of non-liability.  The driver can also ask for the license back at a hearing before the DMV after filing a security deposit amount set by the administrative judge, the deposit to be held for up to two years.  Second, the Financial Responsibility Law requires the uninsured driver to maintain insurance into the future.  The uninsured driver’s license will be suspended until he or she obtains an SR-22 Certificate.  An SR-22 Certificate is a form issued by the driver’s insurance company in addition to the proof of insurance card.  If the driver stops paying premiums within three years of the date that the SR-22 is issued, the insurance company will report that fact to DMV and the driver’s license will be suspended again.  Nevada’s Financial Responsibility Law affects out of state drivers via interstate compact.  Nevada will report the uninsured accident to the driver’s home state and that state’s drivers’ license gets pulled until Nevada’s law is satisfied.

Knowing the purpose and effect of these two distinct laws is absolutely essential to address many Nevada coverage questions.

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  1. […] is also interplay between Nevada’s accident reporting law and its Financial Responsibility Law.  Like the accident reporting law, the Financial Responsibility Law is triggered if property […]