Matter of Travelers Ins. Co., 70 N.Y.2d 950 (1988)
When an insured purchases supplementary uninsured motorist coverage with a clause allowing a trial de novo if the arbitration award exceeds the standard statutory limits, the entire award is subject to review, not just the excess above those limits.
Summary
Travelers Insurance Co. appealed an order regarding supplementary uninsured motorist coverage. The insured had purchased additional coverage beyond the standard statutory limits, which included a provision allowing either party to seek a trial de novo if an arbitration award exceeded those standard limits. After an arbitration award exceeded the statutory limits, Travelers sought to limit the trial de novo to only the excess amount. The New York Court of Appeals held that the trial de novo clause applied to the entire award, not just the portion exceeding the standard limits. The court found no ambiguity in the policy and enforced the plain meaning of the agreement.
Facts
An insured purchased supplementary uninsured motorist coverage from Travelers Insurance Co., exceeding the standard $50,000/$100,000 statutory limits. The policy included an endorsement that allowed either party to seek a trial de novo if an arbitration award exceeded the standard coverage limits. The insured made a claim, and the arbitration award was set at $100,000.
Procedural History
After the arbitration award, Travelers sought to limit the trial de novo to only the amount exceeding the standard statutory limit of $50,000. The lower courts rejected this argument, holding that the trial de novo applied to the entire award. Travelers appealed to the New York Court of Appeals.
Issue(s)
Whether a trial de novo clause in a supplementary uninsured motorist insurance policy, triggered by an arbitration award exceeding standard statutory limits, applies to the entire award or only to the excess above those limits?
Holding
No, the trial de novo clause applies to the entire award because the policy language provides for a review of all issues when the award exceeds the standard statutory limits.
Court’s Reasoning
The Court of Appeals reasoned that the supplementary uninsured motorist coverage endorsement, authorized by the Motor Vehicle Accident Indemnification Corporation (MVAIC) and approved by the Superintendent of Insurance, explicitly provided for a trial de novo of all issues if the arbitration award exceeded the standard $50,000/$100,000 limitation. The court found no support in the statute or logic for Travelers’ argument that only the excess amount should be subject to review. The court stated, “In addition to contradicting the express provisions of the indorsement, appellant’s argument that the first $50,000 of an award is binding and unassailable and that the de nova trial should be limited to the excess awarded above that amount finds no support in the statute or in logic.” Furthermore, the court found no ambiguity in the policy requiring strict construction against the insurer. The policy’s face sheet clearly indicated coverage extending up to $100,000/$300,000, amounts only available through supplementary coverage, further supporting the interpretation that the entire award was subject to the trial de novo provision. The court emphasized that the supplementary coverage is still considered “uninsured motorist insurance” and is governed by the same statutory framework, albeit with expanded coverage and the trial de novo option. The court reasoned that the insured purchased and paid for the right to a de novo trial, and the court should not rewrite the contract. The court emphasized the importance of enforcing contracts as written, absent ambiguity. The court also noted the policy clearly indicated that, with respect to uninsured motorists, coverage would extend up to $100,000/$300,000 per accident, amounts only available pursuant to a supplementary uninsured motorist coverage indorsement since they are in excess of the maximum uninsured motorist coverage of $50,000/$100,000 required by Insurance Law § 3420.