McDowell & Osburn recently settled a case against a surplus lines insurer that did not want to provide uninsured motorist coverage for a 12 year-old girl who was hit by a car while walking across a street.   The young girl suffered a brain injury in addition to broken bones and internal injuries.  The young girl’s parents had an umbrella policy purchased through an independent agent and placed with United States Liability Insurance Company [“USLIC”].  USLIC claimed that it was a surplus lines insurer and pursuant to RSA 405:24 it did not have to comply with the RSA 264:15 mandate that UM coverage equal the liability coverage amount and offered its claimed UM coverage limit of $25,000.

Our office brought a declaratory judgment court action against the insurer seeking the full amount of the coverage purchased by the parents.  We argued that the USLIC policy was essentially the same type of insurance regularly available from any number of admitted insurance companies and the plaintiff’s family presented no unusual risk relative to obtaining coverage.  Therefore, the USLIC policy was not a ‘surplus lines’ policy and the RSA 264:15 mandate that all umbrella policies provide UM coverage in the same amount as liability coverage applied.

The New Hampshire Superior Court agreed that RSA 264:15 applied to the USLIC policy and stated in an order that “[g]enerally, surplus lines insurance insures against liability for unusual risks that fall outside traditional markets and are typically unavailable through state-authorized carriers.”  The Court ordered UM coverage up to the $1,000,000 liability limit of the umbrella policy.  Order of 11.30.11.

After USLIC appealed to the New Hampshire Supreme Court the case settled in February of 2013 for the payment of a confidential amount by USLIC.