Opinion ID: 2375654
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Heading Rank: 1

Heading: Merchants policy

Text: The Beans and Mr. Miller claim that Merchants is obligated under its garage liability policy to defend Mr. Miller and to pay any judgments entered against him up to the full limits of the policy, which were $100,000 per person and $300,000 per accident. Merchants claims, however, that its obligation is limited by two provisions of the policy in question. First, the policy states that the term insured does not include any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment. Second, the policy also contains the standard workmen's compensation exclusion, which provides that the policy does not apply to any obligation for which the insured or any carrier as his insurer may be held liable under workmen's compensation, unemployment compensation, or disability benefits law, or under any similar law; [or] to bodily injury to any employee of the insured arising out of and in the course of his employment by the insurer. The trial court ruled that, despite the exclusionary language, Merchants has a duty to defend Miller and must pay any judgment up to the minimum limits of the financial responsibility law. See Allstate Ins. Co. v. Roberts, 109 N.H. 108, 111, 244 A.2d 199, 201-02 (1968); Merchants Mut. Cas. Co. v. Tuttle, 98 N.H. 349, 354-55, 101 A.2d 262, 265 (1953). Merchants did not except to that ruling, but the Beans and Mr. Miller did. [1] Exclusionary language in the policy cannot operate to defeat or avoid coverage up to the minimum limits of liability provided by the Financial Responsibility Act. RSA 268:16 III. Whether Merchants is obligated under the garage liability policy to pay any judgment in excess of the statutory minimum established by the financial responsibility law depends upon the application of the principles set forth in Liberty Mutual Insurance Co. v. Home Insurance Co., 116 N.H. 12, 351 A.2d 891 (1976). In Liberty Mutual we held that a policy exclusion identical to the one in the present case, excluding coverage for bodily injury to any employee of the insured arising out of and in the course of his employment, did not apply to the facts presented there. In reaching that result, this court deemed that under the policy the co-employee who was operating the vehicle at the time of the accident was an insured separate from the named insured. While the injured party was an employee of the named insured, he was not an employee of the insured who was seeking coverage, and therefore the exclusion did not apply. 116 N.H. at 16-17, 351 A.2d at 894. That construction is not possible in the present case. Unlike the policy in Liberty Mutual, the Merchants policy expressly states that the term insured does not include a person in Jonathan Miller's position, a person engaged in the business of his employer who seeks coverage for bodily injury to any fellow employee of such person injured in the course of his employment. We have previously held similar limitations on the definition of insured to be valid restrictions on coverage beyond the statutory minimum. Allstate Ins. Co. v. Roberts, 109 N.H. 108, 244 A.2d 199 (1968); Merchants Mut. Cas. Co. v. Tuttle, 98 N.H. 349, 101 A.2d 262 (1953). [2] We therefore hold that the trial court correctly ruled that Merchants is obligated to defend Jonathan Miller and to pay any judgment only up to the minimum limits of the financial responsibility law. The fact that those minimum limits may be inadequate to compensate the injured parties for their damages is a question for the legislature.