Amendment to the Definition of Uninsured Motor Vehicle Expands UM Coverage

The New Hampshire Legislature recently amended the statute that defines what is an uninsured motor vehicle.  Prior to the amendment, the definition of an uninsured motor vehicle included two categories: (1) vehicles for which the liability insurer was unable to make payment of the policy limits because of insolvency, and (2) vehicles where the applicable liability insurance limits are less than the limits of the uninsured motorist coverage applicable to an insured.

Effective January 1, 2015, the definition of an uninsured motor vehicle includes one more category of vehicles – those vehicles where the “available liability insurance has been reduced by payments to others injured in the subject accident to an amount less than the limits of the uninsured motorist coverage applicable to the insured.”  See RSA 259:117.

An example is illustrative of how the amendment expands coverage.  Suppose a tortfeasor causes an accident that injures several people.  The tortfeasor has a liability motor vehicle policy with $1 million in coverage.  Two people are killed in the accident and five other people are seriously injured.  The parties allocate a settlement amongst all parties injured or killed in the accident.  Assume that the people who were injured but not killed in the accident each received $40,000 from the tortfeasor’s liability policy and that this is a fair allocation based on the amount of claims on the liability policy.  Also assume that one of those people had an uninsured motorist policy in the amount of $250,000 and that the person’s damages are over $40,000.

Under the old definition of uninsured motorist coverage, the person with the $250,000 uninsured motorist policy would not be able to recover anything from his uninsured motorist carrier.  This is because the tortfeasor’s coverage ($1 million) was more than the person’s uninsured motorist coverage ($250,000).  However, under the new definition of uninsured motor vehicle, that same person is entitled to receive uninsured motorist benefits.  This is because the claims from the other injured parties in the accident reduced the amount of coverage from the liability insurer to an amount that is less than the coverage under the person’s uninsured motorist coverage.  This is a fair result.  The injured person should be able to collect under his own uninsured motorist policy because the amount actually available to him through the tortfeasor’s motor vehicle policy is less than the amounts available to him through his own uninsured motorist policy.

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