Recent Nevada court rulings highlight the significant risks associated with failing to fully disclose all available liability insurance coverage. In three separate cases, Nevada courts imposed substantial sanctions, including case-terminating sanctions in two matters and a monetary sanction exceeding $200,000 in another, based on findings that defendants failed to disclose all potentially applicable insurance coverage, including excess and umbrella policies. In each instance, defendants made piecemeal disclosures naming additional policies or had multiple requests to supplement and failed to do so.
For companies litigating in Nevada, these rulings underscore the importance of evaluating insurance disclosures early and thoroughly. Under Nevada Rule of Civil Procedure 16.1(a)(1)(A)(v), (which largely mirrors FRCP 26(a)(1)(A)(iv)), a party must produce for inspection and copying "any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment." The recent orders demonstrate that Nevada courts interpret this obligation broadly and expect disclosure of all potentially applicable layers of coverage, including excess and umbrella policies, regardless of a party's assessment of the likely exposure in the case.
These decisions serve as a reminder that insurance disclosure obligations often require coordination among legal, risk management, and insurance personnel. In-house counsel should consider implementing processes at the outset of litigation to identify all potentially responsive policies, confirm available limits, and ensure that disclosures are updated if additional coverage is identified during the course of the case.
In each matter, the court concluded that the defendants failed to satisfy their disclosure obligations. Two of the cases proceeded to evidentiary hearings, and one included testimony from corporate counsel concerning the circumstances surrounding the disclosures. Although the facts varied, each order focused on the same central issue: whether the defendant had fully disclosed all available insurance coverage as required by Nevada's disclosure rules.
The rulings also illustrate that courts may scrutinize not only whether coverage ultimately exists, but whether reasonable efforts were made to investigate and disclose potentially applicable policies. Taken together, these decisions suggest that delayed, incomplete, or piecemeal insurance disclosures may expose parties to significant sanctions. Beyond the immediate risk of monetary penalties, adverse evidentiary rulings, or even case-terminating sanctions, disputes over insurance disclosures can create unnecessary litigation costs, distract from substantive case defenses, and affect a party's credibility before the court. If you would like additional information regarding these decisions or copies of the orders discussed in this alert, please contact us.