Strategies, Challenges, and Answers

The Nevada Supreme Court Reconciles Conflicts Between Nevada’s UM/UIM Law And An “Owned But Uninsured” Exclusion

Vehicle InsuranceIn an earlier post HERE, we explained how the Nevada Supreme Court reconciled the conflict it found between Nevada’s Compulsory Automobile Liability Insurance Law, NRS 485.185, and an auto policy’s household exclusion.  A few years later, the Nevada Supreme Court encountered the same type of conflict in a Uninsured / Underinsured Motorist setting.

Like liability coverage, Nevada UM/UIM coverage has a compulsory element as well.  As we explained in an earlier POST, Nevada auto insurance companies “must offer” UM/UIM coverage and unless the insured rejects it in writing, it is included in every auto insurance policy, even if the carrier did not charge a premium for it.  See NRS 690B.020 and NRS 687B.145.  In the case of Zobrist v. Farmers Ins. Exchange, 103 Nev. 104, 734 P.2d 699 (1987), the Zobrist policy included UM/UIM coverage.  However, it also included an exclusion for “owned but uninsured” autos.

Zobrist was hurt when his dune buggy collided with another car.  The Zobrist dune buggy was not insured under the Farmers policy.  Zobrist collected $15,000 in liability coverage from the tortfeasor’s auto policy.  He then turned to his Farmers UM/UIM coverage to collect the remainder of his damages.

Farmers said that the “owned but uninsured” exclusion and the earlier Estate of Neal case would save it from paying any more than an additional $15,000 in UM/UIM benefits.  Zobrist’s counterargument was that NRS 687B.145(2)’s “must offer” language required the insurance company to maintain coverage up to “the amount equal to the limits of coverage for bodily injury.”  In other words, Zobrist felt that the “must offer” obligation voided the owned but uninsured exclusion altogether.

However, following the paradigm set in Estate of Neal, the Nevada Supreme Court said that “an exclusionary clause is void only to the extent that it would defeat the minimum security required by statute but valid to prevent recovery in excess of the minimum.”  Thus Farmers was obligated to pay the $15,000 minimum limit thereafter pay no more of Zobrist’s damages.

If you have questions about policy exclusions in a UM/UIM context, feel free to contact Mike Mills at Mills & Associates at 702-240-6060, extension 114 or email him at


  1. Lisa Gibbs says

    Nevada should be held cop able in regards to the state min 15/30 I was hit on a bike and my dr. bills exceed 65,000.00 the person who hit me just has Nevada min. I am 49 years of age and this accident broke my pelvis in 2 places, over 86 stitches plus numerous staples in my head, staples in my elbow. I will always have a limp, will never feel the right side of my head except for head aches, my right hand has lost the feeling in the pinky and ring finger, will never be able to where my hair up because I have a massive scare across my hair line not to mention that my hair will never grow back where the stitches and staples where I have been through 2 lawyers whom both withdrew from the case. So now I am handling it my self. The claims adjuster says by law we only have to pay 15,000.00 fore medical. What if I go after the state of Nevada because they are the one who set an unrealistic Bodily injury minimum?