Strategies, Challenges, and Answers

Nevada Supreme Court Enforces Choice Of Law Provision In Mississippi Auto Insurance Policy

Man and flag of Mississippi (clipping path included)Randall and Toni Faehnrich lived with their two sons in Mississippi.  The Faehnrich’s owned a Jeep.  Mr. and Mrs. Faehnrich divorced and Mrs. Faehnrich decided to move to Las Vegas.  After moving to Nevada but before changing the plates, registration and insurance, Toni Faehnrich crashed the Jeep.  The Faehnrich boys were hurt in the accident.

Randall brought suit against his wife Toni in behalf of their injured sons.  In Nevada, it had been against public policy for a Nevada Auto Insurance Policy to totally prevent an injured family member from recovering at least the minimum coverage from a negligent driver even if the driver is a member of the same household.  See Here.  However, household exclusions are apparently enforceable in Mississippi. 

This conflict of laws gave rise to an important question that only the Nevada Supreme Court could answer.  The question was whether Nevada’s public policy would force Ms. Faehnrich’s insurance company Progressive to pay damages to the injured sons?  That question was answered in Progressive Gulf Ins. Co. v. Faehnrich, 130 Nev. Adv. Op. 19, 327 P.3d 1061 (March 27, 2014).

Ms. Faehnrich’s auto policy was issued in Mississippi.  The policy said that if there were any disputes about coverage, the disputes would be decided based on the law of state in which the application was made.  In this case, that was Mississippi.  However, Mr. Faehnrich argued that even though Ms. Faehnrich had not changed her license plates, registration and insurance policy, she and the boys were Nevada residents and that Nevada public policy should force Progressive to pay the boys for their damages at least up to the amount of Nevada’s minimum coverage of $15,000 per person as required by NRS 485.3091.

The insurance company pointed to the earlier Nevada Supreme Court case of Sotirakis v. USAA, 106 Nev. 123,787 P.2d 788 (1990).  As explained in THIS earlier Nevada Coverage Law blog post, Mr. and Mrs. Sotirakis were both California residents.  There the Nevada Supreme Court found that California law, not Nevada public policy, should control when interpreting the insurance policy issued to Mr. & Mrs. Sotirakis in California, even though the accident that caused injury happened in Nevada.

However, Mr. Faehnrich pointed out that his sons’ case was different.  His sons were Nevada residents.  Nevada public policy should protect them and should pay them at least a minimum limits recovery for their injuries.

In response, the Court called everyone’s attention to a statute that no one cited.  That being NRS 687B.147.  The statute provides that with the proper disclosures, a Nevada auto policy can completely excludes household members.  The Court argued that if a Nevada policy can completely exclude household members, why should it interfere with a Mississippi law that allows the same thing?  In other word, Mississippi law controlled and the exclusion was upheld.

If you have a coverage question or a choice of law question, don’t hesitate to call Mike Mills at Mills & Associates.  He will gladly speak to you about your concerns.  Mike can be reached at 702-240-6060×114 or you can email him at