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March 24, 2009

IMMEDIATE ACTION NEEDED

Nevada Assembly Bill 224 Creates a New Cause of Action Against Insurers

Background:

The Nevada Commerce and Labor Committee is currently considering Bill 224, an act that makes it an unfair practice for an insurer to deny the payment of an amount due under an insurance policy if that amount is not in dispute. However, the language of the bill is unclear and will lead to increased litigation in an area in which consumers are already protected by other unfair practice legislation. Further, this bill also authorizes an insured to recover costs and reasonable attorney’s fees, entitling lawyers to fees “without limitation.” This will ultimately result in increased legal costs for insurance companies, which will in turn result in higher insurance costs for Nevada citizens and encourage and reward the filing of frivolous lawsuits and “run up” litigation costs. You can view the full text of the bill online.

Action Needed:

This bill is scheduled to be considered by the Commerce and Labor Committee in the next few days. Please e-mail the members of the committee as soon as possible to urge him/her to vote "no" on AB 224. If you are represented by a member of the committee, it will be very helpful for you to point out in your e-mail that you are a constituent.

The members of the committee include:

Talking Points for Assembly Members:

Existing law protects consumers against unfair practices by insurers.

  • A consumer has the right to sue his/her insurance company if the company engages in any of 16 specified acts - NRS 686A.310(a)–(p)
  • A consumer has a right to sue his/her insurer if the company
    • fails to affirm or deny coverage within a reasonable time – NRS 686A.310(d);
    • fails to equitably settle a claim when liability is reasonably clear – NRS 686A.310(e);
    • fails to settle a claim promptly when liability is reasonably clear – NRS 686A.310(l);

AB 224 would increase insurance costs for consumers and businesses.

  • Faced with the prospect of a lawsuit that second guesses its view of what’s in dispute, an insurer will be motivated to pay claims that may not be justified. The cost of those higher claim payments will affect the price of insurance.

AB 224 would allow a new unfair practice for which an insurer can be sued.

  • AB 224 would allow suits when payment is denied when the amount of the payment “is not in dispute.”
  • Insurers already must settle a claim when liability is clear. AB 224 just adds confusion.

AB 224 would increase litigation.

  • What does “in dispute” mean?
  • The bill invites controversy.
  • More controversy means more business for lawyers.

The real goal of AB 224 is to increase trial lawyer income.

  • The bill would entitle lawyers to fees “without limitation.”
  • The fees that insurance companies would have to pay lawyers will ultimately be borne by Nevada consumers and businesses.

Attorney’s fees may already be available to the prevailing party whether by contract or Nevada statutes.

Tips on Communicating with Committee Members:

  • Be polite!
  • Use your own words – don’t cut and paste from this e-mail Action Alert.
  • Say why you think this bill is a bad idea or why it would adversely affect you. For example, if you agree that the bill would increase litigation, you might want to say “This bill is confusing. I think it would add even more litigation to our court system, which is already over-burdened.”

Posted: Tuesday, March 24, 2009 12:00:00 AM. Modified: Wednesday, March 25, 2009 8:16:45 AM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

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