Nevada Division of Insurance to Disallow Policy Exclusions Related to COVID-19

The Nevada Division of Insurance (“NVDOI”) issued an important notice last week to all property and casualty insurers doing business in the state. Pursuant to the notice, the NVDOI will temporarily disallow the issuance of new business interruption policies—and those providing related coverage—if they contain exclusions specifically mentioning COVID-19, viruses, or pandemics. Michelman & Robinson answers some of the questions insurers and policyholders in Nevada may have about the notice.

Q. Who is impacted by the notice and what exactly does it restrict?

A. The notice is directed to all property and casualty insurers offering coverage for business interruption and related perils in Nevada, and it makes clear that the NVDOI will not approve any new policy or endorsement language containing exclusions of coverage that specifically mention COVID-19, viruses, or pandemics (at least temporarily).

It should be noted that the NVDOI emphasizes in the notice that the language of an insurance policy determines what perils are and are not covered. That being said, to the extent an insurer asserts that previous policy language already excludes coverage for COVID-19-related claims (e.g., a policy submitted, approved, and issued before the coronavirus crisis contains exclusions for viruses or pandemics), and now seeks to add a provision specifically excluding COVID-19, the NVDOI will not accept such an addition, even if its only purpose is to clarify that the policy excludes – and has always excluded – coverage for viruses and pandemics, including COVID-19.

Q. Does the notice affect policies that are already in place?

A. No, the notice does not retroactively affect policies that have already been submitted and received approval; however, the NVDOI has requested that insurers voluntarily remove the prohibited exclusionary language from policies submitted and approved on or after March 12, 2020.

Q. I am an insurer in Nevada. How do I withdraw the prohibited exclusionary language from my policy?

A. A voluntary withdrawal of exclusions specifically mentioning COVID-19, viruses, or pandemics may be made by way of a new filing submitted through the System for Electronic Rate and Form Filing (“SERFF”). In the new filing, you need to include only the forms to be withdrawn or amended to remove the exclusionary language.

Q. How long will the NVDOI continue to disallow policies that include the prohibited exclusions?

A. The NVDOI will continue to temporarily deny the exclusionary language related to COVID-19, viruses, or pandemics until Nevada Governor Steve Sisolak lifts the Declaration of Emergency now in place in the state.

Q. Where does the NVDOI’s authority to issue such a notice come from?

A. The NVDOI’s authority to temporarily disallow the COVID-19 and related exclusions stems from the State of Emergency that has been in effect in Nevada since March 12, 2020. With that power at hand, the division issued the notice to protect consumers against the narrowing of previously expected insurance coverage and ambiguity of interpretation of insurance policies during a time of uncertainty and financial strain resulting from the COVID-19 pandemic.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.