State Enacts New Insurance Law

Nevada lawmakers have passed a groundbreaking insurance law aimed at ensuring companies remain operational in the state, as wildfire risks discourage insurers from covering high-risk areas.

Assembly Bill 376, passed unanimously by the Legislature and signed by Gov. Joe Lombardo, took effect Jan. 1. The law allows insurers to carve wildfire coverage out of standard homeowner policies and instead offer it through separate policies or other alternative products.

Supporters said the change gives insurers flexibility to continue offering at least partial coverage rather than canceling policies outright. Insurance Commissioner Ned Gaines said the law will prevent homeowners from losing all coverage due to wildfire risk.

In recent years, wildfires have led to a rise in cancellations and denials. In 2022, over 260 homeowner policies were canceled due to wildfire threats, with more than 2,400 applications denied. In 2023, cancellations rose to 481, with nearly 5,000 applications declined.

Opponents warn the law could weaken consumer protections and leave homeowners underinsured. Michael DeLong of the Consumer Federation of America said insurance is to protect against disasters, not exclude them.

The legislation also creates a regulatory “sandbox” allowing insurers to test new coverage models with state approval. Critics argue that such programs can lessen oversight.

The bill’s passage coincided with the failure of a separate proposal to create a state-run wildfire insurance backstop, leaving AB376 as Nevada’s primary response to the growing insurance challenge.