NH Supreme Court Finds Trial De Novo Clause in UIM Policy Enforceable

In a lengthy written opinion released on May 1, 2018, the New Hampshire Supreme Court declared that trial de novo provisions in an uninsured/underinsured motorist insurance policy are generally enforceable.

Joseph Rizzo was a passenger in Linda Matz’s car.  The vehicle was at the front of a three-car chain-reaction accident: Genci Naum rear-ended the middle vehicle, which in turn rear-ended Matz’s car.  Naum was found to be at fault; he had insurance that met the requirements of the New Hampshire Financial Responsibility law — $20,000.  Ms. Matz’s policy from Allstate had UIM limits of $100,000.  Rizzo claimed that he was injured in the accident and sought recovery.  Naum’s carrier settled for its $20,000 limit, and Rizzo pursued his claim against Matz’s UIM coverage.  Allstate denied liability to Rizzo, who subsequently invoked arbitration.  The panel awarded Rizzo $63,000, with a $20,000 offset for the sum already received from Naum’s carrier.  Citing policy language that permitted either party to seek a trial de novo if the arbitration panel returned an award above the limits of the Financial Responsibility Law, Allstate rejected the award and demanded trial.

Rizzo sued Allstate, alleging that it had breached the insurance contract and seeking to confirm the arbitration award.  Rizzo also alleged that the trial de novo clause was unenforceable, ambiguous, and void as against public policy.  The New Hampshire Superior Court granted summary judgment to Rizzo.

The New Hampshire Supreme Court reversed, holding that trial de novo clauses like the one that appeared in the Allstate policy do not contravene public policy in New Hampshire and, moreover, are neither ambiguous nor unconscionable.  The court recognized that such clauses have been construed in other states and are the subject of either legislative pronouncement or court cases, with wildly divergent outcomes depending on the jurisdiction.  The decision is notable because it cogently and clearly explains New Hampshire law, definitively pronounces on the subject, and goes out of its way to give full effect to the terms of the policy as they were written.  The case is likely to be cited frequently in the future.