Opinion ID: 1390684
Heading Depth: 1
Heading Rank: 2

Heading: Workmen's Compensation Benefits Exclusion

Text: Having established that the uninsured motorist statute, K.S.A. 40-284, applies to the policies, the effect of the statute must be determined with relation to the policy defenses raised by defendant. Prior to commencement of suit it was defendant's sole contention that plaintiff's recovery should be reduced by the amount received from workmen's compensation benefits. Defendant originally refused on this ground to make payments under the uninsured motorist clauses contained in the policies. Later, defendant amended its position to include additional policy defenses. Here, we are concerned only with the validity of the policy provision reducing the loss payable under the uninsured motorist coverage by the amount received in workmen's compensation benefits. Defendant's argument on this point was based mainly on the assumption that the uninsured motorist statute was not applicable. It contends the provision of subsection ( c ) of limits of liability under Part II of the policy is a valid contract provision which should be given effect to reduce any amounts payable under the policy by the $14,000 workmen's compensation award paid to plaintiff. Both policies provided: Any loss payable to any person under the terms of this Part II shall be reduced by the amount paid and the present value of all amounts payable to him under any workmen's compensation law, disability benefits law or any similar law. The trial court held the foregoing provision which attempted to reduce the uninsured motorist coverage limits was void and contrary to public policy of this state. We agree with the trial court. A mandatory uninsured motorist statute is remedial in nature and it should be liberally construed to fulfill its intended purpose. ( Forrester v. State Farm Mutual Automobile Ins. Co., 213 Kan. 442, 517 P.2d 173.) In Clayton v. Alliance Mutual Casualty Co., 212 Kan. 640, 512 P.2d 507, we were confronted with various policy provisions which purported to place requirements on the insured as a condition precedent to the commencement of an action to recover damages under an uninsured motorist endorsement. By applying the provisions of K.S.A. 40-284, we held that insurance policy provisions which purport to condition, limit, or dilute the unqualified uninsured motorist coverage mandated by the statute are void and of no effect. The same is true of a policy provision similar to that in the instant case which attempted to reduce the uninsured motorist coverage by the amount of workmen's compensation benefits. Such a clause is inconsistent with the purpose of the mandatory statute and falls within the proscription announced in Clayton. For cases from other jurisdictions holding that setoff provisions for workmen's compensation such as those contained in defendant's policies were void, see: Peterson v. State Farm Ins. Co., 238 Or. 106, 393 P.2d 651 (1964); State Farm Mutual Automobile Ins. Co. v. Cahoon, 252 So.2d 619 (Ala. 1971); Mason v. Allstate Insurance Company, 189 So.2d 907 (Fla. 1966); Booth v. Seaboard Fire & Marine Insurance Company, 431 F.2d 212 (8th Cir.1970); Aldcroft v. Fidelity & Casualty Co., 106 R.I. 311, 259 A.2d 408 (1969). See also, 24 A.L.R.3d Anno., Uninsured Motorist  Compensation, p. 1369. In Peterson, the court illustrated the reasoning behind the conclusion that such provisions are against the public policy and unenforceable: ... Insurance policy provisions imposing a lesser obligation on the insurer than that required by statute are unenforceable.... In this case the insurance is required by statute. The statute requires the insurer to assume the obligation to provide coverage for an insured who is legally entitled to recover damages from an uninsured motorist because of injuries or death. The statute requires that the extent of this protection, i.e., limits, be not less than in policies listed as proof of financial responsibility. The Financial Responsibility Act requires limits of $5,000 for injury or death to one person, and $10,000 for injury or death to two or more persons. ORS ch. 486. The legislature did not further describe the coverage of the statute. However, we note that the Financial Responsibility Act, referred to specifically in the uninsured motorist provision, contains no provision regarding the effect of the receipt of workmen's compensation benefits by the injured party. 1. The basic purpose of the uninsured motorist provision seems clear. It provides protection for the automobile insurance policyholder against the risk of inadequate compensation for injuries or death caused by the negligence of financially irresponsible motorists.... If the motorist who injured the plaintiff in this case had been insured, the amount of plaintiff's recovery from that insurer would not have been reduced by the amount of any workmen's compensation benefits received by the plaintiff.... (pp. 110, 111, 112.) We conclude the policy provisions purporting to reduce the amounts payable under the uninsured motorist coverage by the amount of workmen's compensation benefits were invalid and unenforceable.