Analysis

Several of the phrases in the quoted portion of the provision seem self-explanatory. Thus, “reasonable expenses” is not likely to encompass recuperation at a resort; “necessary medical services” would usually rule out cosmetic surgery as an accompaniment to a simple fracture; “caused by accident” can ordinarily eliminate recovery for funeral services for a known suicide. Each of the foregoing statements is qualified because the circumstances of a particular case can have a bearing on interpretation but, in general, the phrases are not really troublesome.

“Expenses incurred for services rendered within three years from the date of the accident” is a phrase that needs further elaboration.

“Expenses incurred” is not new language in any way unique to the personal auto policy. In fact, it appears in earlier medical payments insuring agreements and its meaning has been the subject of many legal actions between insurance companies and claimants. For example, suppose a young child sustains injury to the mouth and gums and an oral surgeon prudently defers final repairs until such time as the child's permanent teeth appear, perhaps for a number of years which exceeds the time period fixed by the policy. Are the eventual charges for the deferred surgery considered “expenses incurred,” or must the actual repairs take place within the fixed period in order to be considered “expenses incurred”?

In some jurisdictions, courts have held that the medical services must be performed within the fixed period. In one case, an insured was struck by an automobile and received continuous medical care from the date of the accident until a date after the time limit set by the policy. The North Carolina supreme court decided in favor of the insurance company. The company was not liable for any expenses for treatment provided after the expiration of the time limit on “expenses incurred.” The case from North Carolina is Czarnecki v. American Indemnity Co., 131 S.E.2d 347 (1963).

In other jurisdictions, courts have held that performance of medical services need not take place during the fixed time period in order for expenses to be incurred. Expenses are incurred if within the fixed time period the insured and the attending physician agree on the need for deferred treatment and the insured either agrees to pay the physician at the time services are rendered or actually pays the physician before the expiration of the fixed period. For example, the nine-year-old son of an insured received injuries to his mouth and teeth, and the attending dentist recommended that final repairs be deferred until a future stage in the boy's development—which would certainly occur outside of the fixed period of the policy. After obtaining an estimate of the total cost of repairs and establishing its reasonableness, the father paid the dentist in full and notified the insurer within the time limit provided. Although the repairs had not taken place within the time period, a Texas court found that expenses had nevertheless been incurred within this time and the insurer was liable up to the appropriate limits of the policy. This case is Maryland Casualty Co. v. Thomas, 289 S.W.2d 652 (1956).

These cases, while admittedly several years old, are still good law in the affected jurisdictions. They did deal with a fixed time limit that was different from the one in the current PAP since today, as noted above, the medical payments coverage applies to those expenses incurred within three years from the date of the accident. Nevertheless, the point remains: namely, the fixed time period for medical payments is subject to judicial review and interpretation.

Of course, the addition of the phrase “for services rendered” to this insuring agreement in the current edition of the PAP would seem to be an attempt to clarify the point that medical payments are for a definite limited time period. The “for services rendered” phrase dictates that such services have to be rendered within three years from the date of the accident to be paid as medical payments. If, for example, in the Maryland Casualty Company case, the dentist rendered the services to the injured boy when the boy's physical development allowed for such services, and this was ten years after the accident, then the new version of medical payments coverage would not apply and the decision in the Czarnecki case would be the norm.

Analysis

The status of “insured” is determined by application of different criteria to two groups: 1) the named insured or family members; and 2) any other person while occupying a covered auto of the named insured. The named insured or a family member (relative, ward, or foster child living with the named insured) is a covered person while “occupying” (in, upon, getting in, on, out or off) a motor vehicle or any type of trailer or when struck by such a unit as a pedestrian. An Insurance Services Office clarification states that there was no intent, by use of the term “pedestrian”, to limit coverage to insureds when struck by a vehicle while walking. In other words, for example, an insured who is struck by a motor vehicle while riding a bicycle has medical payments coverage.

The motor vehicle, however, must be “designed for use mainly on public roads” in order for there to be coverage. For example, medical payments insurance does not apply to the named insured or a family member injured while occupying, or as a pedestrian when struck by, a snowmobile, a bulldozer, or a farm tractor: none of these vehicles is “designed for use mainly on public roads.” Many motorcycles qualify as “vehicles designed for use mainly on public roads” and, as such, are not excluded by this distinction. A general exclusion to Part B, nevertheless, does eliminate medical payments for any insured occupying a motorcycle or, for that matter, any motorized vehicle having fewer than four wheels. Medical payments coverage, then, is available when the named insured or a family member is struck by a motorcycle designed for street use. A motorcycle designed principally for use off public roads—such as a “dirt bike” or a race motorcycle—would seem to be excluded altogether whether being operated on or off a public road.

As mentioned, the status of “insured” applies also to any person other than the named insured or a family member, but only while this person occupies the covered auto. For example, if a friend of A is riding as a passenger in A's auto and an accident happens, A's medical payments coverage will pay for the medical services needed by the friend.

On the other hand, when the named insured or a family member is operating an auto that is not covered, any nonrelated passengers are not covered persons under the named insured's medical payments insurance. So, using the previous example, if the auto that A is driving is not a covered auto under A's PAP, the friend can not receive any medical payments from A's policy. Insurance Services Office has stated that this lack of coverage follows a belief that persons such as A's friend should be protected in these circumstances by their own insurance or that on the automobile being occupied.

Analysis

The first exclusion is discussed previously. The second exclusion is similar to exclusion 5 in part A of the PAP and is discussed in the pages pertaining to the liability coverage part of the PAP; see Annotated Personal Auto Policy—Part A.

Analysis

This exclusion is aimed at preventing an insured from collecting medical payments under the PAP should that insured be injured in a motor vehicle such as a motor home or a trailer. Such an injury should be covered under a health care policy (for the named insured or a family member) or the homeowners policy (for other than the named insured or family members).