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Uninsured Motorist Insurance, No-Fault Insurance

Uninsured Motorist Insurance, No-Fault Insurance and Workers’ Compensation

The issue of a double recovery can arise when a worker is injured during and in the course of his employment as a result of a vehicle accident. It is the general consensus, however, that a workers’ compensation insurance carrier cannot claim a lien on the funds recovered under the worker’s uninsured motorist insurance policy. The argument bolstering this position is that a worker has the right to procure an independent insurance policy at his own expense to supplement any benefits he may receive under the workers’ compensation system. A second argument supporting the lien prohibition is that the payment of funds under the uninsured motorist policy is based on the contract between the parties rather than on a compensable injury.

In contrast to the uninsured motorist insurance policy is the automobile no-fault insurance policy. Generally, a no-fault insurance carrier may reduce its payable benefits by the amount of workers’ compensation benefits received by the worker. Of course, the insurer’s right to claim a reduction in the amount it owes under the no-fault policy is dependent on the worker’s injury being compensable under the worker’s compensation statute. The determination of “compensability” and the amount that is payable is fairly dependent on the wording of the applicable statute in the respective states. For example, various no-fault statutes hinge the deduction on criteria such as workers’ compensation benefits that are “recovered,” “actually received,” or “entitled to be received.”

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.