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Medical Payments Coverage
Summary: This section discusses Part B of the Personal Auto policy. The company agrees to pay reasonable expenses incurred for necessary medical and funeral services because of "bodily injury" caused by accident and sustained by an insured. This is what is known as medical payments coverage and it is an optional coverage. Part B of the personal auto is structured very much like Part A of the auto policy; as there is an Insuring Agreement, a definition of "insured", a set of exclusions, and clauses pertaining to the limit of liability, other insurance, and the liability on the part of the insured in order for payment to be made to a claimant. Many parts of Part B will be identical to coverages and exclusions listed in Part A; refer to that section for the in-depth discussion.
The policy was revised in 2018 from the 2005 form, and significant changes are highlighted in this article. Minor editorial changes that do not affect coverage will not be indicated. As the policy is long we have broken the discussion is separate sections, which you can link to below:
Topics covered:
Insuring Agreement
A. We will pay reasonable expenses incurred for necessary medical and funeral services because of "bodily injury":
1. Caused by an accident; and 2. Sustained by an "insured".
We will pay only those expenses incurred for services rendered within three years from the date of the accident.
Analysis
Medical payments coverage is for the benefit of the insured. Reasonable medical and funeral expenses are provided when such payments are for injuries to an "insured" because of an auto accident. Reasonable expenses for medical and funeral service are just that – expenses that provide the required care without extravagance. Cosmetic surgery to prevent scarring is a reasonable medical expense, while cosmetic surgery because an insured has always thought her nose was too big is not.
Coverage is provided for expenses that are incurred within three years of the accident. An insured may need physical therapy for an extended period of time, or may need multiple surgeries. The three year period is provided in order to allow for such situations. A child may need dental work, but may need to be a little older before such work can be appropriately made.
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, a family member who is struck by a motor vehicle while riding a bicycle (not a motorized one) has medical payments coverage.
The motor vehicle 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 automatically excluded by this distinction. However, a general exclusion to Part B does eliminate medical payments for any insured occupying a motorcycle, or actually, any motorized vehicle having fewer than four wheels. So, if the named insured or a family member is a pedestrian and is struck by a motorcycle designed for street use, medical payments coverage is available; if the named insured or family member is occupying the motorcycle and is injured in an accident, there is no medical payments coverage for the bodily injuries suffered. 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" also applies 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 Lucy is riding as a passenger in Lucy's auto and an accident happens, Lucy'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 non-related passengers are not covered persons under the named insured's medical payments insurance. So, using the previous example, if the auto that Lucy is driving is not a covered auto under Lucy's Personal Auto policy, the friend can not receive any medical payments from Lucy's policy. Insurance Services Office (ISO) has stated that this lack of coverage follows a belief that a person such as Lucy's friend should be protected in these circumstances by her own insurance or that on the automobile being occupied.
Exclusions
We do not provide Medical Payments Coverage for any "insured" for "bodily injury":
1. Sustained while "occupying" any motorized vehicle having fewer than four wheels.
2. Sustained while "occupying" "your covered auto" when it is being used as a public or livery conveyance. This includes but is not limited to any period of time "your covered auto" is being used by any "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the vehicle.
This Exclusion (2.) does not apply:
a. To a share-the-expense carpool; or b. While "your covered auto" is being used for volunteer or charitable purposes.
Analysis
The first exclusion is discussed previously; the policy is not designed to provide coverage for vehicles with fewer than four wheels. The exclusion for "transportation network platform" use as a driver is added here as well. The personal auto policy is designed to provide coverage for an individual's use of the vehicle for personal reasons, such as going to the store or work, and not for holding the vehicle out for hire.
A new exception has been added to this exclusion, and it is for the use of the vehicle for volunteer or charitable purposes. This would be taking the girl scouts on a camping trip, or taking residents of an assisted living facility to a play because the insured volunteers at the facility.
3. Sustained while "occupying" any vehicle located for use as a residence or premises. 4. Occurring during the course of employment if workers' compensation benefits are required or available for the "bodily injury".
Analysis
This exclusion is aimed at preventing an insured from collecting medical payments under the Personal Auto should that insured be injured in a motor vehicle such as a motorhome or a trailer. Such an injury should be covered under a health insurance policy (for the named insured or a family member) or the homeowners policy (for other than the named insured or family members).
An insured who is injured during the course of employment should seek workers compensation benefits and this exclusion tries to make that point. If workers compensation benefits are required or available for the insured should he or she suffer a bodily injury, the insured should turn to those available benefits. The personal auto policy is not designed to provide medical benefits when an "insured" is injured on the job.
5. Sustained while "occupying", or when struck by, any vehicle (other than "your covered auto") which is:
a. Owned by you; or b. Furnished or available for your regular use.
6. Sustained while "occupying", or when struck by, any vehicle (other than "your covered auto") which is:
a. Owned by any "family member"; or b. Furnished or available for the regular use of any "family member".
However, this exclusion (6.) does not apply to you.
Analysis
These two exclusions are basically the same as the owned or furnished exclusions found on the liability coverage part of the Personal Auto. Again, vehicles owned by "family members" should have their own policies as will vehicles furnished to "family members" for their own use.
7. Sustained while "occupying" a vehicle without a reasonable belief that that "insured" is entitled to do so. This Exclusion (7.) does not apply to a "family member" using "your covered auto" which is owned by you.
Analysis
Remember that "insured" as defined includes any other person while "occupying" "your covered auto". This exclusion ensures that if someone steals the insured's auto or otherwise is using it without permission, that person does not have coverage. The exclusion does not apply to "family members" using "your covered auto". This is discussed fully in the liability section.
8. Sustained while "occupying" a vehicle when it is being used in the "business" of an "insured". This Exclusion (8.) does not apply to "bodily injury" sustained while "occupying" a:
a. Private passenger auto; b. Pickup or van; or c. "Trailer" used with a vehicle described in a. or b. above.
Analysis
This exclusion is very specific to "occupying" a vehicle for "business" use but has an exception for injury sustained while "occupying" a private passenger auto, pickup, van or trailer attached to either. Therefore, if an insured is injured in a vehicle such as a tow truck used in his "business" there is no coverage, but if the insured is injured in his personal auto while using it for "business", there would be coverage. Remember this is medical payments coverage for the insured only, and not liability coverage.
9. Caused by or as a consequence of:
a. Discharge of a nuclear weapon (even if accidental); b. War (declared or undeclared); c. Civil war; d. Insurrection; or e. Rebellion or revolution.
10. From or as a consequence of the following, whether controlled or uncontrolled or however caused:
a. Nuclear reaction; b. Radiation; or c. Radioactive contamination.
Analysis
These are the war and nuclear exclusions that are found on most standard policies. These incidents are rare enough and complex enough that developing a rate for such losses is difficult if not impossible.
11. Sustained while "occupying" any vehicle located inside a facility designed for racing, for the purpose of:
a. Participating or competing in; or b. Practicing or preparing for; any pre arranged or organized:
(1) Racing or speed contest; or (2) Driver skill training or driver skill event.
Analysis
As always, racing or preparing for any sort of race or vehicle competition is excluded. Likewise the exclusion has been added for driver skill training or skill events. Again, these are dangerous activities that the personal auto policy is not designed to cover. Note that the exclusion is for racing while inside a facility designed for racing; it does not mention street racing. If an insured is racing his vehicle down the street in the middle of the night and is injured, there would be coverage.
12. Sustained while "occupying", or when struck by, "your covered auto" while:
a. Enrolled in a personal vehicle sharing program under the terms of a written agreement; and b. Being used in connection with such personal vehicle sharing program by anyone other than you or any "family member".
13. Sustained while "occupying", or when struck by, any vehicle which is designed or can be used for flight.
Analysis
This is a new clause in the 2018 policy. With the rise of ride-share programs where an insured may use their personal vehicle for hire, or applications where an insured may loan his vehicle out to others similar to renting a vehicle, these exclusions have been added. While the public/livery exclusion is intact this additional language makes it clear that using the vehicle to provide rides to others, or letting others hire your vehicle similar to a rental car are both excluded under the personal auto policy.
Another new exclusion has been added for any vehicle that is designed or can be used for flight. While such vehicles are not available for purchase by the public, they are in development. Therefore, the exclusion has been added so that when such vehicles are available it is clear that there is no coverage provided by the personal auto policy.
Limit of Liability
A. The Limit Of Liability shown in the Declarations for this coverage is our maximum limit of liability for each person injured in any one accident. This is the most we will pay regardless of the number of:
1. "Insureds"; 2. Claims made; 3. Vehicles or premiums shown in the Declarations; or 4. Vehicles involved in the accident.
B. No one will be entitled to receive duplicate payments for the same elements of loss under this coverage and:
1. Part A or Part C of this Policy; or 2. Any Underinsured Motorists Coverage provided by this Policy.
Analysis
A single limit of liability, stated in the declarations, applies to each insured involved in an accident. The policy says that "This is the most we will pay regardless of the number of insureds, claims made, vehicles or premiums shown in the declarations, or vehicles involved in the accident." This language is aimed at preventing a covered person from "pyramiding" or "stacking" limits under a policy that insures more than one car. Of course, insureds and insurers should take note of the fact that the issue of whether to allow or disallow stacking is still being discussed and answered by courts throughout the country.
A further restriction imposed on the limit of liability in Part B prevents duplication of medical payments by any other coverage of the policy. No one is entitled to receive duplicate payments for the same elements of loss under the medical payments coverage and Part A (liability coverage) or Part C (uninsured motorists coverage) of the policy; duplicate payments are not allowed if any underinsured motorists coverage is provided either.
Other Insurance
If there is other applicable auto medical payments insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you do not own, including any vehicle while used as a temporary substitute for "your covered auto", shall be excess over any other collectible auto insurance providing payments for medical or funeral expenses.
Analysis
Duplication of medical payments by other applicable automobile medical payments insurance is governed by the "other insurance" provision of Part B. As is the case in the liability part of the policy, the insurance company is responsible only for its pro rata "share." Benefits paid with respect to a vehicle not owned by the named insured, however, are excess over any other collectible auto insurance providing payments for medical or funeral expenses.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.