Rudd

Uninsured motorist insurance coverage, first adopted in California in 1961, was designed to provide motorists injured by an uninsured tortfeasor minimum recovery from their own insurers. Such coverage applied only to the situation in which the negligent driver who inflicted injury on the insured person was completely without insurance. Failure to compensate the injured party also resulted, however, when damage was incurred in excess of the often minimal insurance coverage purchased by the tortfeasor. To remedy this perceived defect in the insurance coverage framework, subdivision (p) was added to Insurance Code section 11580.2 in 1985, providing coverage for underinsurance. The issue presented by this appeal is whether the offsets against recovery for under insurance parallel the offsets for un insurance. Specifically, we are asked to determine whether the insurer may offset its liability on an underinsurance risk by the amount of workers’ compensation benefits received by the underinsured insurance policyholder.

Factual Background

H. Michael Rudd (Insured) sustained personal injuries in an accident with a motorist whose insurance policy contained the minimum liability…