November 18, 2018

Colorado Court of Appeals: District Court Erred in Concluding Injured Worker Not Entitled to UIM Benefits from Personal Insurer

The Colorado Court of Appeals issued its opinion in American Family Mutual Insurance Co. v. Ashour on Thursday, May 18, 2017.

Personal InjuriesWorkers Compensation ActPersonal Automobile Insurance PolicyUninsured Motorist Benefits—Underinsured Motorist Benefits.

Ashour was an employee and co-owner of Nubilt Restoration & Construction (Nubilt). While employed with Nubilt, Ashour was severely injured when he was pinned by a 30-foot truck to a nearby tractor-trailer. The accident was caused by the negligence of his co-employee Peake, who failed to set the airbrake on the truck that rolled backward and pinned Ashour to the other vehicle. After the accident, Ashour submitted a claim to Nubilt’s workers’ compensation carrier and subsequently received benefits. He also submitted a claim to Nubilt’s corporate liability insurance provider and received a settlement for that claim based on a policy rider that allowed for coverage of workplace injuries. Ashour then made a claim under his personal automobile insurance policy with American Family Mutual Insurance Company (AFI) for underinsured (UIM) benefits to recover the remainder of his alleged damages. AFI then filed an action for declaratory relief as to whether Ashour was owed UIM coverage when the policy limited UIM benefits to situations where the insured was “legally entitled to recover” from the owner or operator of an uninsured or underinsured motor vehicle. The district court denied Ashour’s motion for summary judgment and granted AFI’s motion for summary judgment.

On appeal, Ashour contended that the district court erred by ruling, as a matter of law, that his claim for UIM coverage under his automobile insurance policy with AFI was precluded because he was not legally entitled to sue his employer or co-employee in tort for his injuries based on their immunity under the Workers’ Compensation Act of Colorado (the Act). Nubilt and its workers’ compensation insurance carrier are immune from suit by Ashour for his injuries sustained in the course and scope of his employment. By extension, co-employees are also immune from suit for injuries to a fellow employee arising out of the scope of employment. However, this exclusive remedy is limited to suits by an injured employee against his employer or co-employee; an injured employee may receive workers’ compensation benefits and bring suit against a third-party tortfeasor. Here, AFI’s uninsured motorist/underinsured motorist (UM/UIM) policy provides coverage where the tortfeasor is underinsured. Underinsured tortfeasors are those who are covered by insurance at the time of the accident. Thus, Nubilt and Peake are effectively underinsured in that Ashour received benefits up to Nubilt’s workers’ compensation insurance limits but still has additional damages from his workplace injury. It is the exhaustion of Nubilt’s and Peake’s limits of liability coverage (i.e., workers’ compensation insurance) that triggers AFI’s obligation to pay UM/UIM benefits. Therefore, Ashour’s claim for UIM benefits under his policy with AFI is not barred by the exclusivity provisions of the Act or by the “legally entitled to recover” language of the policy.

The judgment was reversed and the case was remanded with directions to enter summary judgment in favor of Ashour, declaring, as a matter of law, that AFI must provide coverage of UM/UIM benefits to Ashour upon his proof that Peake was at fault for causing his injuries and of the extent of his damages in excess of the coverage offered him under the Act.

Summary provided courtesy of The Colorado Lawyer.

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