Exploring Nevada's "Defense Within Limits" Laws

Defending a complex commercial lawsuit can be costly. However, liability insurance policies can provide defense coverage and offset this expense.

Typically, liability policies adopt one of two approaches to fund defense costs: defense within limits and defense outside limits. Professional liability policies, including directors and officers and errors and omissions policies, generally provide defense within limits while commercial general liability policies generally provide defense outside limits.

Recent legislation in Nevada attempts to eliminate the availability of defense within limits typically offered by professional liability policies. While the new law has been modified through regulation and is now not as broad as passed by the legislature, it nevertheless could impact the professional liability insurance market in Nevada. Through this statute, Nevada joins several states with similar statutes that risk managers nationwide must consider when purchasing coverage for their organizations.

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