City of Laguna Beach v. CALIFORNIA INSURANCE GUARANTEE ASSN.

In this opinion we resolve the following issue: Did the addition of subdivision (c)(13) to Insurance Code section 1063.1 abrogate Denny’s Inc. v. Workers’ Comp. Appeals Bd. (2003) 104 Cal.App.4th 1433 [ 129 Cal.Rptr.2d 53 ] (Denny’s)? The answer is no. We therefore conclude that the trial court properly invoked the Denny’s rule when it granted summary judgment and concluded that appellant City of Laguna Beach (City) cannot obtain reimbursement from respondent California Insurance Guarantee Association (CIGA) under section 1063.1, subdivision (c)(13). Though that provision renders the obligation of an insolvent excess workers’ compensation insurer a “covered claim” that CIGA must ordinarily reimburse, CIGA need not reimburse a permissibly self-insured employer for benefits paid to an employee for cumulative injury if the employer’s liability is based in part on a period of time when the employer was self-insured and chose not to buy excess insurance for the particular risk.

The judgment is affirmed.

FACTS

Background

Continental Casualty Company (Continental) issued a workers’ compensation policy to the City providing coverage from May 1, 1998, to May 1, 1999. The…