Summary:  Although auto medical payments coverage can be added by endorsement to a business auto or motor carriers coverage form, most commercial insureds do not purchase it as commonly as do personal auto insureds. There are at least two reasons. Commercial auto medical payments coverage provides no coverage for injury to employees in most instances, and, when the named insured's business organization is other than a sole proprietorship, any coverage the form provides for "you" and "family members" has no apparent applicability. Auto medical payments coverage is therefore more likely to be purchased by an individual named insured or by a firm that routinely carries passengers in its automobiles or allows customers to drive its automobiles—taxi or bus companies, ride shares, car dealers, car rental firms, etc.

Auto medical payments coverage does not depend on the insured being legally liable. Ordinarily, an insured purchases it with the belief that once a person is injured, prompt payment of those injuries—regardless of fault—preserves goodwill and possibly even deters a more costly legal action.

Topics covered:

Conditions

Coverage

The insuring agreement of the auto medical payments endorsement (CA 99 03) is virtually identical to medical payments coverage under the personal auto policy. The insurer promises to pay "reasonable expenses incurred for necessary medical and funeral services" because of accidental bodily injury to an insured. Expenses for services rendered within three years from the date of the accident will be paid.

The following are "insureds" for auto medical payments:

  • The named insured and any family member while occupying any auto. They are also insureds if, as pedestrians, any auto strikes them. A family member is a person related to the named insured by blood, marriage, or adoption and residing in the named insured's household; it includes a ward or foster child. Occupying means "in, upon, getting in, on, out or off."
  • The final category of insured under this endorsement is anyone else occupying a covered auto or a temporary substitute auto. The endorsement says that a temporary substitute auto is in place of a covered auto that is out of service because of its breakdown, repair, servicing, loss, or destruction.

If the named insured is a corporation, partnership, or association, the first type of insured has no applicability. A corporation, for example, cannot sustain bodily injury, nor does it have any "family members." As mentioned earlier, this is one of the reasons that auto medical payments coverage is more popular with individual named insureds, to whom "you" and perhaps "family member" are relevant, than it is with corporations, partnerships, or associations.

The second type of insured—any person occupying a covered auto or a temporary substitute auto—has a potentially greater scope of application than the first type due to its omnibus nature. In fact, the only restrictions on coverage for the second type of insured are the exclusions noted on the form.

One of the principal exclusions eliminates coverage for injuries suffered by employees of the named insured. There is no coverage if those injuries arise out of and in the course of their employment. This exclusion does not apply to domestic servants not entitled to workers compensation benefits; for the purposes of the endorsement, a domestic employee is defined as a person engaged in household or domestic work performed principally in connection with a residence premises. However, the main point of the exclusion is that the injury must arise out of and in the course of employment. For example, if an employee has a company car and is using it on a Sunday afternoon to go to the store for personal reasons, that employee is not in the course of employment and the exclusion does not apply. The exclusion is meant to prevent the employee from receiving both medical payments and workers compensation. Therefore, if the employee is not entitled to workers compensation because he is not in the course of employment, he is entitled to medical payments, subject to any other applicable exclusion on the endorsement.

Exclusions

Business auto medical payments exclusions are similar to those in the medical payments coverage of the personal auto policy. However, CA 99 03 does not include three of the personal auto exclusions:

  1. Bodily injury sustained by any insured while occupying any motorized vehicle having fewer than four wheels. The absence of this exclusion from the auto medical payments endorsement relates to the definition of auto found in standard commercial auto policies, which is not restricted to four-wheel vehicles.
  2. Bodily injury sustained by any insured while occupying a covered auto used for a public or livery conveyance. Consequently, the auto medical payments endorsement does provide coverage, for example, for passengers in a taxi or a bus, as is quite appropriate for commercial auto insurance.
  3. Bodily injury caused by nuclear reaction or radiation or radioactive contamination. However, the nuclear energy liability exclusion endorsement attached to the business auto and motor carrier policies does add a similar exclusion to the auto medical payments endorsement. It excludes "bodily injury resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization." The italicized terms, defined in the nuclear energy liability exclusion endorsement, limit the exclusion to more particular incidents than those within the more general scope of the personal auto exclusion.

In addition to the three omitted exclusions, another difference between the two forms is that the exclusion of business use in the personal auto medical payments section only vaguely resembles the auto business exclusion in the commercial auto medical payments endorsement. The personal auto exclusion applies to bodily injury to any insured while occupying a vehicle being used in the business of an insured, but does not apply to injury while occupying a private passenger auto, a pickup or van, or a trailer used with such a vehicle. The comparable exclusion in the commercial auto medical payments endorsement applies to bodily injury to an insured while working in a business—other than the named insured's—of selling, servicing, repairing, or parking autos.

The purpose of the exclusion is only to eliminate coverage for bodily injury to occupants of a covered auto while it is in the possession of a bailee for hire such as a parking lot or a garage. If the named insured is itself an auto business, the exclusion does not apply to persons occupying covered autos being used in the named insured's business. Thus, if an automobile dealer purchases auto medical payments coverage for the sake of customers who might test-drive or borrow dealership cars, the auto business exclusion does not apply.

Apart from the exclusions already discussed, the exclusions of CA 99 03 are stated briefly below:

  1. Bodily injury sustained by an insured while occupying a vehicle located for use as premises.
  2. Bodily injury sustained by the named insured or a family member while occupying or when struck by any vehicle—other than a covered auto—owned by the named insured or furnished or available for the named insured's regular use.
  3. Bodily injury sustained by any family member while occupying or struck by any vehicle—other than a covered auto—owned by or furnished or available for the regular use of any family member.
  4. Bodily injury caused directly or indirectly by any type of war, warlike action, or insurrection in its many forms, including any action taken in defense of any of these.
  5. Bodily injury to anyone using a vehicle without a reasonable belief of being entitled to do so.
  6. Bodily injury sustained by an insured while occupying any covered auto while used in any professional racing or demolition contest or stunting activity, or while practicing for such contest or activity. The exclusion goes on to say that the insurance also does not apply to any bodily injury sustained by an insured while the auto is being prepared for a racing, demolition, or stunting activity.

Limit of Insurance

Regardless of the number of covered autos, insureds, premiums paid, claims made, or vehicles involved in the accident, the most that the insurer will pay for each insured injured in any one accident is the limit of insurance shown on the declarations page. Also, in order to correspond with the wording in the limit of insurance section on the business auto coverage form dealing with duplicate payments, CA 99 03 declares that "no one will be entitled to receive duplicate payments for the same elements of loss under this coverage and any liability coverage form, uninsured motorists coverage endorsement, or any underinsured motorists coverage endorsement".

Conditions

Auto medical payments coverage is subject to the general conditions of the policy to which it is attached. However, the endorsement contains two amendments of general conditions:

  1. The first amendment states that the general provision entitled "the transfer of rights of recovery against others to us" does not apply to this coverage. Thus, the insurer may not pursue subrogation for any payments made under this coverage.
  2. The endorsement amends the phrase "other collectible insurance" to "other collectible auto medical payments insurance." Thus, with respect to a nonowned auto, auto medical payments coverage is excess over other collectible auto medical payments coverage only — not, for instance, over the insured's major medical insurance. Auto medical payments coverage is primary insurance with respect to bodily injury involving a covered auto. If there is other auto medical payments insurance that covers on the same basis, either excess or primary, the loss is shared through pro rata contribution, each company paying in the proportion that its limit of liability bears to the total of all applicable limits of liability.

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