Across the country, the various states recognize two distinct methods of calculating the amount of underinsured motorist coverage available. The two models are known as “excess-type” and “reduction-type” UIM coverage.
In states where the “reduction-type” UIM model is followed, the insured’s UIM coverage limits are reduced by the underlying liability policy limits. For example, if you had $100,000 in UIM coverage and the tortfeasor had $15,000 in bodily injury liability limits, then you would have $85,000 in UIM coverage available for that accident. If the bodily injury liability limits and the UIM limits are equal, then there is no UIM coverage available under a “reduction-type” policy.
Nevada follows the “excess-type” UIM model. N.R.S. 687B.145 (2) provides:
Uninsured and underinsured vehicle coverage must include a provision which enables the insured to recover up to the limits of his own coverage any amount of damages for bodily injury from his insurer which he is legally entitled to recover from the owner or operator of the other vehicle to the extent that those damages exceed the limits of the coverage for bodily injury carried by that owner or operator. If an insured suffers actual damages subject to the limitation of liability provided pursuant to NRS 41.035, underinsured vehicle coverage must include a provision which enables the insured to recover up to the limits of his own coverage any amount of damages for bodily injury from his insurer for the actual damages suffered by the insured that exceed that limitation of liability.
In the case of Mid-Century v. Daniel, 101 Nev. 433, 705 P.2d 156 (1985), the Nevada Supreme Court explained that the predecessor of this statute required insurance companies to offer UIM coverage that stacks on top of the tortfeasor’s liability policy. So under the same scenario as above, the $100,000 in UIM limits would be added on top of the $15,000 bodily injury liability limits making $115,000 in total limits available to the injured insured.
The UIM carrier has no right of subrogation against a driver who has purchased at least the minimum liability limits of coverage.
