Strategies, Challenges, and Answers

Improper Cancellation or Non-Renewal Can Be A Breach Of Contract And An Unfair Insurance Claims Settlement Practice

In 1989, the Reinkemeyers insured their home with Safeco.  Between 1989 and 1993, they submitted three homeowner’s insurance claims, none of which were their fault.  In 1994, Safeco told the Reikemeyers that it would not renew their policy.

The Reinkemeyers sued alleging that Safeco had violated the provisions of NRS 687B.310 – .420.  In particular, they pointed to NRS 687B.385 which currently provides:

NRS 687B.385 Cancellation, nonrenewal or increase in premium due to claims for which insured was not at fault prohibited. An insurer shall not cancel, refuse to renew or increase the premium for renewal of a policy of motor vehicle insurance covering private passenger cars or commercial vehicles as a result of any claims made under the policy with respect to which the insured was not at fault.

The insurance company responded that the legislature did not intend NRS 687B.310 et al to apply to homeowner’s insurance policies.  The U.S. District Court agreed with the insurance company.  The Reinkemeyers appealed to the Ninth Circuit.

In Reinkemeyer v. Safeco Ins. Co. of Am., 166 F.3d 982 (9th Cir. 1999) the court asked the Nevada Supreme Court whether the trial court’s interpretation of Nevada law was correct.  The Nevada Supreme Court responded “No”.  It said:

because homeowner’s insurance policies are contracts of casualty and property insurance, such policies are subject to the statutes pertaining to cancellations and nonrenewals of insurance policies set forth in NRS 687B.310 to 687B.420, except to the extent that a homeowner’s insurance policy might provide insurance for home protection, as defined in NRS 690B.100.  (NRS 690B.100 involves Home Warranty Insurance Programs).

Since this was not an Home Warranty type policy, the Nevada Supreme Court concluded that Homeowners Coverage was subject to the Cancellation and Non-Renewal provisions of NRS 687B.310 et. al.

The insurance company was not happy with the Nevada Supreme Court’s decision, so much so it asked the Ninth Circuit to ignore the Nevada Supreme Court’s ruling.  That did not go over so well for the insurance company.  The Ninth Circuit said:

SAFECO has not cited and we have not found any decision where a federal court has disregarded, on any grounds, a state court’s answer to a certified question. Nor does SAFECO advance one of the few established grounds for disregarding state court interpretations of state law in other contexts such as where state court decisions violate federal law or are an “obvious subterfuge to evade consideration of a federal issue.” Mullaney v. Wilbur, 421 U.S. 684, 691 n. 11, 95 S.Ct. 1881, 1886 n. 11, 44 L.Ed.2d 508 (1975) (collecting cases).

166 F.3d at 984.

The Ninth Circuit remanded the case to the U.S. District Court asking it to consider NRS 687B.310 in its decision regarding the non-renewal of the Reinkemeyer’s homeowner’s policy.

In fact, this is so important to the legislature, it made violations the cancellation and non-renewal provision in NRS 687B.310 – .390 or NRS 687B.410 an unfair insurance practice.  See NRS 686A.310(1)(m).

If you have questions about insurance cancellation, don’t hesitate the contact Mike Mills at Mills & Associates at 702-240-6060×114.  He will be glad to consult with you.

About Michael Mills

Mr. Mills practices in the area of civil litigation and appeals, with particular experience in matters involving trucking liability, insurance defense, insurance coverage, premises liability, products liability and defense of personal injury. Mr. Mills is a member of the Trucking Insurance Defense Association, the Defense Research Institute Trucking Committee and the Nevada Motor Transport Association. Mr. Mills is licensed to practice before the Nevada Supreme Court and the Utah Supreme Court. He is also licensed to appear before the United States Supreme Court, the U.S. District Courts for the Districts of Nevada and Utah, as well as the U.S. Court of Appeals for the Ninth Circuit. Mr. Mills has created 3 Blogs for the benefit of the insurance industry. He serves as editor and publisher of the Nevada Insurance Law Blog, the Nevada Coverage and Bad Faith Blog and the Nevada Trucking Law Blog.

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