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Piersa v. Phoenix Insurance Co.5/10/2005
ing language of § 38a-334-6 (d) (1) (B) of the Regulations of Connecticut State Agencies: "except that the policy may provide for the reduction of limits" to the extent of workers' compensation payments. (Emphasis added.) The dispute arises because the word "policy" is specifically defined by statute in such a way that it does not comfortably fit within a scheme of self-insurance.
General Statutes § 38a-1 (15) provides as follows: " `Policy' means any document, including attached endorsements and riders, purporting to be an enforceable contract, which memorializes in writing some or all of the terms of an insurance contract." This definition applies to this case, and to § 38a-334-6 of the regulations, because the opening clause of § 38a-1 provides: "Terms used in this title, unless it appears from the context to the contrary, shall have a scope and meaning as set forth in this section." This definition invokes the traditionally understood insurance policy, with the characteristics of an enforceable written contract between insurer and insured, memorializing the terms of that contract. That definition does not fit comfortably within a self-insurance context because in such a context the insurer and insured are one and the same, and there is no enforceable contract between them.
The question presented by this case, therefore, becomes: how should we interpret the language of § 38a-334-6 (d) (1) of the Regulations of Connecticut State Agencies, "except that the policy may provide for the reduction of limits," when there is no such policy within the statutory definition because the insured has chosen to be self-insured? (Emphasis added.) The parties differ on how to answer this conundrum. The plaintiff contends that the self-insured defendant must create some written document specifying, either in specific terms or by reference to the regulation, the reduction of limits that it wishes to invoke. The defendant contends that there is no statutory obligation to do so and that, by electing to be self-insured and notifying the commissioner of that election, it necessarily and as a matter of law provided for all reduction of limits that are permitted by the regulation.
We agree with the plaintiff. We conclude that the language of the regulation must be interpreted so as to require a municipal self-insurer that wishes to impose permitted limits on its obligations as such to do so by a written document that appropriately provides for reduction of limits. We do so for several reasons.
The first reason stems from two closely related notions regarding the relationship between commercial insurers and self-insurers. One is that, by electing to become a self-insurer for its uninsured motorist coverage, pursuant to § 38a-371 (c), the defendant became the functional equivalent of both an insurer and a named insured under § 38a-336 (f). Hertz Corp. v. Federal Ins. Co., supra, 245 Conn. 378 n.4; Conzo v. Aetna Ins. Co., supra, 243 Conn. 682-83. It follows from this dual role of insurer and insured that the defendant assumed the obligations of an insurer and the rights of an insured. One of its obligations as an insurer is that it "provide `assurance for payment of all obligations imposed by [§ 38a-371 (c)] substantially equivalent to those afforded by a policy of insurance that would comply with [that] section.' " Conzo v. Aetna Ins. Co., supra, 682-83. The second notion is that the "legislature intended to create a uniform scheme of uninsured motorist insurance coverage applicable to self-insurers as well as commercial insurance carriers . . . and . . . that self-insurers have the same obligation as commercial insurers with respect to uninsured motorist laws . . . ." (Citation omitted.) Id., 6
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