Uninsured Motorist Benefits are reduced by Workers Compensation

Barry P. Goldberg has seen almost every argument which attempts to access Uninsured and Underinsured motorist benefits. Creative lawyers sometimes attempt to circumvent some of the rules by contending that the insured's policy language is somehow ambiguous and does not track the wording of the Uninsured Motorist Statute in order to avoid a workers compensation set off. However, the courts have uniformly rejected these attempts by incorporating the statutory language into every policy regardless of the actual language used. The set off clause as applied to workers compensation is Insurance Code section 11580.2, subdivision (h). That section provides that:

"any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced:

"(1) By the amount paid … under any workers' compensation law, exclusive of nonoccupational disability benefits."

Although this setoff provision specifically applies to uninsured motorist coverage, it permits such a set off against underinsured motorist coverage as well. (Rudd v. California Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 953-954.)

A new argument that we are seeing is that the policy language permits an offset against "disability benefits" without excluding "nonoccupational disability benefits" as required by section 11580.2, subdivision (h)(1). According to that argument, providing for a set off against "disability benefits" is overbroad and violates public policy. Therefore, the entire provision is void.

However, in most cases, the insured receives workers' compensation benefits, not "nonoccupational disability" benefits. Accordingly, an insurer is statutorily authorized to offset these workers' compensation benefits against the underinsured motorist coverage. By authorizing such a reduction, the Legislature intended to prevent the insured from recovering twice for the same injury. (Rangel v. Interinsurance Exchange (1992) 4 Cal.4th 1, 8.) "[T]he Legislature's purpose in enacting section 11580.2 was to 'shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workmen's compensation carrier.'" (Ibid.)

Moreover, there is no requirement that a policy strictly adhere to the statutory language. (McGreehan v. California State Auto. Assn. (1991) 235 Cal.App.3d 997, 1004.) Rather, the provisions of section 11580.2 are a part of every insurance policy to which they are applicable. (Hartford Fire Ins. Co. v. Macri (1992) 4 Cal.4th 318, 324.) These provisions are read into the policy and become a part of it. (Craft v. State Farm Mut. Auto. Ins. Co. (1993) 14 Cal.App.4th 1284, 1292.) Accordingly, the insurer's policy reference to "disability benefits" does not void the entire provision as a violation against public policy.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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