The New Hampshire Supreme Court has ruled that a provision in an auto insurance policy requiring insured individuals to seek underinsured motorist benefits within three years of an accident is unenforceable. This decision, made on October 25, emphasizes that such a requirement restricts the insured’s right to receive benefits equivalent to what they would have received if the other driver had adequate liability insurance.
Case Overview
The case involved Shane and Maura Pelissier, who were injured in a car accident on July 29, 2017. They filed a lawsuit against the at-fault driver within the three-year statute of limitations for personal injury claims. During this legal process, they discovered that the other driver’s liability insurance limits were insufficient to cover their medical expenses, which exceeded their damages.
On November 5, 2021, after realizing the other driver was underinsured, the Pelissiers notified Geico of their intent to file an underinsured motorist claim. However, Geico denied the claim, citing a provision in their policy that required claims to be filed within three years of the accident date, which was July 29, 2017.
Court Findings
The Pelissiers subsequently sued Geico for underinsured motorist benefits. Geico sought summary judgment, arguing that the claim was barred because it was not filed within the three-year window stipulated by their policy. However, the trial court ruled against Geico, stating that the contractual limitation was unenforceable. The court noted that such a provision could force insured individuals to file claims before they even know if the other party is underinsured, violating public policy.
The New Hampshire Supreme Court upheld the trial court’s decision, emphasizing that the purpose of the state’s uninsured motorist statute (RSA 264:15) is to ensure that insured individuals are placed in the same position they would have been in if the at-fault driver had adequate liability insurance. The court explained that while state law allows three years for individuals to sue the at-fault driver, Geico’s policy requirement unfairly limited the Pelissiers’ ability to seek underinsured benefits based on the accident date rather than when they discovered the other driver’s insufficient coverage.
Key Legal Principles
Public Policy: The court reiterated that the underlying public policy of the uninsured motorist statute is to protect injured parties by ensuring they can seek the same benefits they would have received if the at-fault driver had sufficient liability coverage.
Accrual of Claims: The court clarified that the cause of action for underinsured motorist benefits arises when the insurer wrongfully denies coverage. This means that the contractual limitations provision effectively shortens the time available for insureds to file claims, as it starts counting from the accident date rather than from when the insured discovers the need for underinsured coverage.
Equitable Treatment: The court underscored that the provision could restrict the insured’s recovery compared to individuals injured by drivers with adequate liability insurance, thus violating the principle of equitable treatment under the law.
Conclusion
The New Hampshire Supreme Court’s ruling serves as a significant precedent, reinforcing the idea that insurance policy provisions cannot impose unreasonable restrictions that undermine the protections intended by state law. This decision not only benefits the Pelissiers but also sets a broader standard for how underinsured motorist claims should be handled in New Hampshire, ensuring that insured individuals are not penalized for circumstances beyond their control.
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