Garage Medical Payments Insurance
Automobile and Premises
June 2007
Summary: Just as a garage coverage form covers liability arising out of automobiles and premises-operations, so can medical payments coverage be arranged for both exposures under a garage policy. Auto medical payments coverage, however, must be added to the policy by one endorsement CA 99 03, and premises-operations medical payments coverage by another, CA 25 05. See Auto Medical Payments Insurance for a discussion of the auto medical payments endorsement. The subject of the present pages is the endorsement for garage locations and operations medical payments coverage, CA 25 05. These pages also cover rating procedures applying to both types of medical payments insurance as written for a garage.
Garage locations and operations medical payments coverage is appropriate for most garage insureds, who by the nature of their business normally have customers on the premises, either shopping for cars or waiting for cars to be repaired. The coverage does not depend on the insured’s being legally liable and is purchased with the belief that prompt payment of a person’s injuries without a determination of fault can preserve goodwill and possibly even deter a more costly legal action.
A. Coverage
We will pay reasonable medical and funeral expenses to or for each person who sustains “bodily injury” to which this coverage applies, caused by an “accident” and resulting from:
1. The maintenance or use of the locations shown in the Declarations and that portion of the roads or other accesses that adjoin these locations for garage business.
2. All operations necessary or incidental to a garage business.
We will pay only those expenses incurred for services rendered within one year from the date of the “accident”.
Analysis
The coverage agreement is quite simple. It promises insurance to cover reasonable medical and funeral expenses for persons sustaining accidental bodily injury at the insured’s locations or arising out of the insured’s operations. The “location” includes “that portion of the roads or other accesses that adjoin these locations for garage business.” Accidental injury arising out of garage operations is covered for med pay regardless of the location (within coverage territory). “Operations” must be “necessary or incidental to a garage business” but any occurrence may be “incidental,” i.e., happening by chance.
The coverage applies to only those expenses that are incurred for services actually rendered within one year from the date of the accident; mere proposed services would not be covered under the terms of this endorsement.
B. Exclusions
This insurance does not apply to:
1. “Bodily injury” resulting from the maintenance or use of any “auto”.
2. “Bodily injury” to a person, whether or not an “employee” of any “insured”, if benefits for the “bodily injury” are payable or must be provided under a workers’ compensation or disability benefits law or a similar law.
3. “Bodily injury” arising directly or indirectly out of:
a. War, including undeclared or civil war;
b. Warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents; or
c. Insurrection, rebellion, revolution, usurped power, or action taken by governmental authority in hindering or defending against any of these.
4. “Bodily injury” to any “insured”.
Analysis
The first of the four exclusions in the endorsement concerns bodily injury resulting from the maintenance or use of any auto. The policy’s definition of auto — “a land motor vehicle, trailer or semitrailer” — means that the coverage for premises-operations exposures does not reach bodily injury arising out of the maintenance or use of even a vehicle such as a forklift or an electric cart. The auto medical payments endorsement is available for response to the exposure to these and other types of “mobile equipment.”
The second exclusion rules out coverage for any person who is covered under a workers compensation or similar law. Even the employee of another concern is not covered here if he is entitled to workers comp or similar benefits. The exclusion underlines the fact that garage locations and operations medical payments coverage is principally for the purpose of covering injuries to customers visiting the named insured’s premises.
The third exclusion applies to bodily injury caused by war, declared or not, insurrection, or warlike actions, or the consequences of either. The fourth exclusion applies to bodily injury to any insured.
C. Limit of Insurance
Regardless of the number of persons who sustain “bodily injury” or claims made, the most we will pay for “bodily injury” for each person injured in any one “accident” is the Limit of Medical Payments Coverage shown in the Declarations.
D. Changes in Conditions
The Transfer of Rights of Recovery Against Others to Us Garage Condition does not apply.
Analysis
What seems like a limiting statement is actually an expansive one. No matter how many persons are injured in an accident, each can recover the limit shown in the declarations.
The garage locations and operations medical payments endorsement is subject to the general conditions of the garage policy, with one exception. The provision entitled “the transfer of rights of recovery against others to us” does not apply. That is, the insurer does not reserve its right of subrogation against a person responsible for injury to a recipient of medical payments insurance.
Insurance Services Office publishes rules and rates for auto medical payments coverage and garage locations and operations medical payments coverage in the automobile division of its commercial lines manual (CLM). The computation of a premium for medical payments coverage is done by multiplying the liability premium by the factors from an applicable table found in the CLM. The available tables show factors for auto medical payments only, garage operations medical payments only, and combined garage operations and auto medical payments. The factors are based on medical payments limits of $500, $750, $1,000 and $2,000; for medical payments limits other than these, the CLM advises one to refer to the insurance company for applicable factors
The CLM indicates that the tables and factors used are based on liability coverage written for only a $25,000 limit of liability. If the insured has chosen that amount, the chosen medical payments factor is, as noted above, applied directly to the liability premium to arrive at the medical payments premium. If, as is more likely, liability coverage is written for a limit higher than $25,000, the medical payments factor is computed by dividing the medical payments percentage for the $25,000 limit by the applicable increased limit factor that was used to compute the premium for the higher liability limit. As the liability premium goes up, the medical payments factor goes down so that the medical payments premium stays constant. Medical payments coverage itself is not affected by the coverage form’s liability insurance limits.
If the named insured is an automobile dealer, medical payments coverage can be rated either as unlimited or limited; this corresponds to the garage liability insurance being written on an unlimited liability basis or a limited basis with reference to the named insured’s customers. Because the liability premium with customer coverage limited is less than the premium applicable when liability coverage is unlimited, the medical payments factor for application to the limited premium is slightly higher than that used based on the unlimited premium.
Proprietors and Executive Officers
An additional rule for automobile dealers allows medical payments coverage to be written for proprietors and executive officers when the dealer does not otherwise have auto medical payments coverage. The medical payments premium for proprietors and executive officers is the private passenger type medical payments premium doubled for each person. Resident relatives of a proprietor or an executive officer can be covered on the same basis, although the premium per person is merely the private passenger type medical payments premium — it is not doubled as in the previous instance.
Finally, in the event that an individual proprietor’s garage policy (automobile dealer only) includes auto medical payments coverage, the CLM calls for drive other car medical payments coverage to be provided at no additional cost. This coverage is expressed in the drive other car endorsement; see Drive Other Car Coverages. Briefly, the endorsement extends medical payments coverage to the individual proprietor or any family member while occupying a nonowned auto or when struck as a pedestrian by a nonowned auto.