CT Court Rules Self-Insureds Must Write Down UM Limit Reductions
June 2005
On May 10, 2005, the Connecticut Supreme Court
decided Piera v Phoenix Ins. Co., 871 A2d 992
(2005), holding that a self-insured entity must create a written document specifying
any reductions in limits applicable to its statutorily mandated uninsured motorist
coverage.
by Kevin
Merriman
Goldberg
Segalla LLP
In this case, the plaintiff-police officer, employed by a municipality, was
injured when an uninsured vehicle collided with his police cruiser. The municipality
was self-insured for statutorily mandated uninsured motorist (UM) coverage,
with minimum limits of $20,000 per person (General Statutes § 14-112). As a
result of his injuries, the plaintiff incurred medical expenses and lost time
from employment, for which he was reimbursed in workers compensation benefits
in excess of the municipality’s stated UM limits. When plaintiff sought UM benefits
from his employer, the municipality maintained that the coverage was offset
by the workers compensation benefits.
The only writing regarding the limits of the municipality’s self-insured
coverage was a letter to the state insurance department, which included stated
limits, but did not specifically invoke any of the reductions in limits permitted
by law, including the reduction for workers compensation benefits paid. Interpreting
§ 38a–334–6 (d) (1) of the Regulations of Connecticut State Agencies, the court
held that a municipal self-insurer that wishes to impose permissible limits
on its obligations to provide UM coverage must do so by a written document that
appropriately provides for reduction of limits.
The court reasoned that by electing to become a self-insurer for its UM coverage,
the municipality assumed the obligations of an insurer to "provide ‘assurance
for payment of all obligations imposed by § 38a–371 (c) substantially equivalent
to those afforded by a policy of insurance that would comply with [that] section.’"
Also, the "legislature intended to create a uniform scheme of uninsured motorist
insurance coverage applicable to self-insurers as well as commercial insurance
carriers … and ... that self-insurers have the same obligation as commercial
insurers with respect to uninsured motorist laws…."
The court concluded it would be consistent with the defendant’s obligations
as an insurer and with the uniform legislative scheme to require a self-insured
to create a written document specifying its selected reductions in limits. The
court emphasized, however, that there is no particular form that a self-insured
entity must use in order to take advantage of the permitted reductions in limits—it
may be part of its written notice to the insurance commissioner of its election
to be self-insured, or it may be part of a written document that the self-insured
entity maintains in its files.
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