Opinion ID: 1195096
Heading Depth: 1
Heading Rank: 2

Heading: The Language of the State Farm Policy

Text: The majority's second basis for deeming Leonard Sr.'s purchase of a standard State Farm homeowners policy to be an election to bring his son within the scope of the workers' compensation system is the assertion the language of the policy provides coverage for workers' compensation benefits payable to Leonard Jr. for injuries sustained in his employment in the residence. Again, I disagree. The majority relies on the policy's definition of residence employees as well as on the endorsement's statement of Who is Covered. These policy provisions, as the majority emphasizes, define residence employee in accord with section 3351(d), excluding those who fall below the time and wage minima of section 3352, subdivision (h), but without any express exclusion of family members. The majority concludes that under a straightforward reading of the policy, Leonard Jr. was therefore a residence employee. I agree Leonard Jr. was a residence employee under the policy. That he was covered for workers' compensation benefits while working in the residence does not, however, follow. In my view, a reasonable insured and insurer would both understand the endorsement to provide (1) liability coverage for workers' compensation benefits to those residence employees whose injuries are compensable within the workers' compensation system, and (2) liability coverage for any civil damages payable to those residence employees who do not come within the workers' compensation system, Injuries to Leonard Jr. occurring in his residential work were excluded from the scope of the worker's compensation law by section 3352(a). The endorsement therefore provided his father with coverage for any civil damages he became liable to pay as a result of Leonard Jr.'s injuries. The endorsement, however, cannot reasonably be read as an election by Leonard Sr. to expand the scope of workers' compensation benefits for which he might become liable. The endorsement, although titled Workers' Compensation (Residence Employees), contains two separate coverages, one for workers' compensation benefits and the other for ordinary damages: Coverage I insures Leonard Sr., with respect to residence employees, for  all benefits required of an insured by the California Workers' Compensation Law.  Under coverage I, State Farm further agreed to be directly and primarily liable  to any residence employee of an insured entitled to the benefits of the California Workers' Compensation Law. (Italics added.) Coverage II insures Leonard Sr., again with respect to residence employees, for all damages for which the insured is legally liable because of bodily injury sustained by a residence employee ... in the course of employment by the insured. As a family member categorically excluded from the system under section 3552(a), Leonard Jr. was not entitled to any benefits under the workers' compensation law, and the law required no benefits be paid to him. Thus the endorsement's coverage I simply did not include benefits for injuries to Leonard Jr. while working in the home. Leonard Sr. was covered, however, under coverage II, for any ordinary civil damages he might become liable for as a result of Leonard Jr.'s injuries. The majority observes that exclusionary clauses in insurance policies must be conspicuous and clear, and that the State Farm policy contains no such exclusion for parents, spouses or children of the insured. (Maj. opn., ante, at p. 1197.) While true, this observation fails to advance the majority's argument. Leonard Jr. was not excluded from coverage under the policy and endorsement  any civil damages for which Leonard Sr. might become liable as a result of his injuries were expressly covered under coverage II of the endorsement  but neither did Leonard Sr.'s purchase of coverage for any benefits payable under the workers' compensation law bring him within the workers' compensation system, from which he was expressly excluded by section 3352(a). To interpret the policy as expanding a homeowner's workers' compensation liability beyond its statutory scope is particularly anomalous where, as here, the policy endorsement merely implements a statutory command for insurance coverage. As we have explained in prior cases, `Where insurance coverage is required by law, the statutory provisions are incorporated into the insurance contract.' ( Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4th 389, 398 [48 Cal. Rptr.2d 159, 906 P.2d 1341].) As demonstrated earlier in this opinion, the purpose of section 11590 was simply to mandate insurance coverage for those whom the Labor Code entitled to workers' compensation benefits. The Labor Code's provisions defining the eligible class, including section 3352(a), should therefore also govern interpretation of the mandated policy, at least in the absence of any indication the parties actually intended to expand coverage so as to elect in workers statutorily excluded from the system. Leonard Sr. purchased a standard homeowners policy, which contained a mandatory endorsement protecting him from liability for any benefits  required of an insured by the California Workers' Compensation Law ... to any residence employee of an insured entitled to the benefits of the California Workers' Compensation Law. There is no evidence he purchased workers' compensation insurance so as to cover employees not entitled to such benefits or any particular employee. Indeed, the application for insurance Leonard Sr. completed contains a space labelled Workers' Compensation Policy requested?, but no mark to indicate such a request was made, thus suggesting his intent was to purchase only such coverage as mandated by section 11590. As already discussed, that statute does not mandate coverage of family members working in the home, who are excluded from the definition of employee by section 3352(a). In my view, no reasonable insured would expect the State Farm policy to create workers' compensation liability or coverage for family members excluded from benefits by section 3552(a).