Opinion ID: 2633498
Heading Depth: 1
Heading Rank: 5

Heading: Dual coverage under the Nevada short-term rental statutes

Text: NRS 482.295 requires that short-term lessors provide minimum third-party liability coverage for the operation of rental vehicles as a condition to DMV registration. NRS 482.305 enumerates the consequences of failure to provide minimum coverage, subjecting the short-term lessor to joint and several liability with the short-term lessee for any damages caused by the short-term lessee's negligent operation of the vehicle: 1. The short-term lessor of a motor vehicle who permits the short-term lessee to operate the vehicle upon the highways, and who has not complied with NRS 482.295 insuring or otherwise covering the short-term lessee against liability arising out of his negligence in the operation of the rented vehicle in limits of not less than $15,000 for any one person injured or killed and $30,000 for any number more than one, injured or killed in any one accident . . . is jointly and severally liable with the short-term lessee for any damages caused by the negligence of the latter in operating the vehicle . . . . 2. The policy of insurance, surety bond or deposit of cash or securities inures to the benefit of any person operating the vehicle by or with the permission of the short-term lessee in the same manner, under the same conditions and to the same extent as to the short-term lessee. . . . . 4. When any suit or action is brought against the short-term lessor under this section, the judge before whom the case is pending shall hold a preliminary hearing in the absence of the jury to determine whether the short-term lessor has provided insurance or a surety bond or deposit of cash or securities covering the short-term lessee as required by subsection 1. Whenever it appears that the short-term lessor has provided insurance or a surety bond or deposit of cash or securities covering the short-term lessee in the required amount, the judge shall dismiss as to the short-term lessor the action brought under this section. (Emphases added.) Salas mandates dual or stacked coverage when the short-term lessee is insured under a personal automobile liability policy, when the short-term lessor has provided statutory coverage, and when the damages sustained by the claimant against the lessee exceed the lessee's personal insurance limits. Our conclusion in Salas was based upon our interpretation of NRS 482.305, as providing coverage under both the lessee's and the lessor's policies: NRS 485.185 requires that every owner of a motor vehicle provide insurance in the minimum amounts set forth therein. Also, in lieu of the owner's policy required by NRS 485.185, the driver may provide an operator's policy, which essentially insures the driver while operating any motor vehicle, in the same minimum amounts. See NRS 485.186. Observing the foregoing in light of NRS 482.305(1), we infer that, in instances where the lessee of an automobile under a short-term lease agreement is covered by an owner's or operator's policy, the legislature was aware that more than one insurance policy would cover the automobile lesseethe driver's personal policy pursuant to NRS 485.185 or NRS 485.186 and the lessor's policy provided pursuant to NRS 482.305(1). We therefore conclude that, by enacting a scheme that contemplates dual coverage [where applicable], the legislature intended that both policies provide coverage up to the respective statutory minimums. [5] Under Alamo, the short-term lessee's personal policy provides primary coverage up to the statutory minimums, and the coverage provided by the short-term lessor is deemed to be secondary, i.e., excess coverage. [6] Accordingly, we stated in Alamo that, absent a personal policy covering the driver, the lessor will step in and compensate the victim up to the minimum limits. [7] It has been suggested in this matter that Salas was wrongly decided and that the existence of minimum insurance provided by the lessee should absolve the lessor of any liability or obligation to pay under the coverage it has obtained in compliance with NRS 482.305. This view is grounded in the public policy considerations behind NRS 482.305: that short-term lessors must simply ensure that minimum coverage from some source is in place to comply with the statute. We reject that proposition. [8] NRS 482.295 requires short-term lessors to provide evidence of minimum coverage on rental vehicles as a condition of DMV registration. In turn, NRS 482.305 requires that the independent minimum coverage provided under NRS 482.295 must also cover short-term lessees in order for the lessor to avoid joint and several liability to the injured third-party claimant for damages caused by the lessee. Thus, NRS 482.305 implicitly requires that the short-term lessor independently provide minimum insurance or coverage to indemnify the short-term lessee for his or her liabilities to third parties injured by the short-term lessee's negligence. Under Salas, these coverages stand as independent sources of public protection against the use of short-term rental vehicles. [9] Salas' conclusion is underscored by the language in NRS 482.305(4) that mandates dismissal of actions against the short-term lessor when the lessor, not the lessee, provides proof that it has provided the required coverage (insurance, deposit or bond). Nothing in NRS 482.305 requires the lessor to ensure that the lessee has his or her own insurance. Nothing in that provision necessarily excuses or releases the lessor's coverage when the lessee has sufficient coverage of his own; and nothing in the statute releases the short-term lessor's joint liability for failure to provide short-term rental insurance when the lessee is separately insured. In short, absent a legitimate waiver by the lessee, the statutory coverage remains in placecoverage for the lessee's liability to other driversregardless of the existence of separate coverage at the time of the rental transaction. [10] Accordingly, subject to the qualifications discussed below, we reaffirm the basic holding in Salas that the existence of insurance provided by the lessee does not automatically exonerate the coverage provided by the lessor. Our reaffirmation of Salas, however, does not compel the conclusion in this case that Hall may make a claim against the Enterprise coverage. Based upon the following lines of analysis, we conclude that the district court correctly dismissed the second action against Enterprise.