Opinion ID: 1159939
Heading Depth: 4
Heading Rank: 2

Heading: The Workers' Compensation Exclusion

Text: (7a) Finally, assuming arguendo, that the first paragraph of Sentry's employers' liability coverage clause applied in this case, Producers nonetheless would still be denied coverage due to exclusion (f) of that same policy. The exclusion applies because the Noyes's injuries created an obligation which Sentry already satisfied under the workers' compensation law, due to the benefits previously paid by Sentry to Noyes as an LAS employee. (8) (See fn. 7.) Appellants argue the phrase the insured, in exclusion (f) is ambiguous and should be construed narrowly ( Reserve Insurance Co. v. Pisciotta, supra, 30 Cal.3d at p. 808) to refer only to the insured against whom an obligation under the workers' compensation law could be imposed. [7] Because no workers' compensation obligation could be imposed on Producers, a nonemployer of Noyes, the exclusion assertedly is inapplicable. We disagree. (9) As the trial court found herein, employers' liability insurance is traditionally written in conjunction with workers' compensation policies, and is intended to serve as a gap-filler, providing protection to the employer in those situations where the employee has a right to bring a tort action despite the provisions of the workers' compensation statute or the employee is not subject to the workers' compensation law. [8] (See generally, 7B Appleman, Insurance Law and Practice (Berdal ed. 1979) § 4571, pp. 1-4.) Generally, these two kinds of coverage are mutually exclusive. ( Ibid. ) Most employers' liability policies limit coverage to liability for which the insured is held liable as an employer. (Hanna, supra, at pp. 21-39.) (7b) The Sentry policy is no exception. Exclusion (f) implements this scheme by excluding from coverage any obligation for which the insured or his insurer may be held liable under workers' compensation. [9] In essence, appellants would have us construe the exclusionary clause in the abstract, without regard to its intended function in the policy. The workers' compensation and employers' liability provisions in Sentry's policy were meant to be read together. An insurance policy, like any other contract, must be construed in its entirety, with each clause lending meaning to the other. ( Holz Rubber Co., Inc. v. American Star Ins. Co. (1975) 14 Cal.3d 45, 56 [120 Cal. Rptr. 415, 533 P.2d 1055, 79 A.L.R.3d 518]; see also Civ. Code, § 1641.) Rather than filling any gaps in coverage, appellants' proffered construction of the policy would require Sentry to pay for Noyes's injuries twice, once by providing on LAS's behalf workers' compensation benefits owing to Noyes as an LAS employee, and the second time by providing on Producers' behalf indemnity for Noyes's tort suit as a nonemployee. This dual recovery under a single policy is contrary to both the plain meaning of the policy itself, and the concept of employers' liability insurance as it is commonly understood.