Court of Appeals Holds That Workers' Compensation Exclusivity Provision Does Not Apply To Uninsured Motorist Benefits
March 1, 2012
On December 13, 2011, the New York Court of Appeals held that an employee who drives his employer's vehicle, and has an automobile accident with an uninsured driver while driving his employer's vehicle during the course of his employment, is entitled to recover uninsured motorist benefits from his self-insured employer, notwithstanding the exclusivity provision of the New York Workers' Compensation Law.
In Matter of Elrac, Inc. v. Exum, Birtis Exum was employed by Elrac, Inc., and had an automobile accident while driving a vehicle owned by Elrac. The other vehicle involved in the accident was driven by an individual who did not have automobile liability insurance. Elrac was self-insured for automobile liability purposes, pursuant to Section 370(3) of the Vehicle and Traffic Law, so it had not obtained an insurance policy to cover the vehicle that Exum was driving.
Under Insurance Law Section 3420(f)(1), every motor vehicle liability insurance policy must contain a provision requiring payment to the insured of damages up to $25,000 in the case of injury and up to $50,000 in the case of death, in the event that the insured has an accident with an owner or operator of an uninsured motor vehicle. Because Elrac was self-insured, Exum sought to recover those damages directly from Elrac. Elrac argued that Exum was barred by the exclusivity provision of the Workers' Compensation Law from recovering uninsured motorist benefits, because Exum's injuries arose during the course of his employment.
The Court of Appeals disagreed with Elrac, holding that Exum's claim for uninsured motorist benefits submitted to his self-insured employer was not barred by the exclusivity provision of the Workers' Compensation Law because "[t]he situation is as though the employer had written an insurance policy to itself, including the statutorily-required provision for uninsured motorist coverage." The Court of Appeals reasoned that Exum would have been able to recover uninsured motorist benefits from an insurance company if Elrac had not been self-insured, and determined that those same benefits were recoverable directly from Elrac. Based on this reasoning, the Court of Appeals affirmed the Appellate Division's decision to allow Exum to proceed with his claim.
