Property and Casualty Insurance · Casualty Insurance · 6 min read
Medical Payments and Uninsured Drivers
- Explain the scope of coverage, insured persons, exclusions, and coordination of benefits under Part B Medical Payments.
- Describe the purpose of Part C Uninsured Motorists coverage, the definition of an uninsured motor vehicle, and how arbitration is applied.
- Compare the operational differences between Medical Payments, Uninsured Motorists, and Underinsured Motorists coverages.
Part B: Medical Payments Coverage
Part B of the standard personal auto policy provides medical payments coverage. Part B pays reasonable expenses for necessary medical and funeral services when an insured sustains bodily injury in an accident, subject to the policy's terms and exclusions. A fundamental feature of medical payments coverage is that it pays benefits without regard to legal liability or fault. Even if the policyholder causes the collision, medical bills for covered injuries can still be paid under this section of the policy.
Under the standard ISO personal auto policy, covered expenses must be for services rendered within three years of the accident. Limits for medical payments apply per person for each accident rather than per occurrence. For example, if a policy has a 5,000 dollar medical payments limit and three eligible passengers are injured in one collision, each can receive up to 5,000 dollars for covered expenses for services rendered within three years of the accident.
Medical payments coverage is strictly designed to handle direct medical and funeral costs. It does not compensate for pain, suffering, or lost wages. The standard ISO personal auto policy's subrogation and reimbursement provision applies to Part B Medical Payments, although some states restrict subrogation or reimbursement of medical payments.
Common mistakes
- Assuming Part B Medical Payments covers lost income or general damages like pain and suffering, when it only covers necessary medical and funeral expenses.
- Believing that Uninsured Motorists coverage pays claims regardless of fault, overlooking that Part C requires proof of the uninsured driver's legal liability.
- Confusing an offset with stacking; an offset reduces available UIM benefits by liability payments or applicable liability limits, as state law and the policy specify, whereas stacking combines limits from multiple coverages or policies.
- Thinking that arbitration under Part C can decide coverage questions, when standard ISO forms only permit arbitration for disputes over legal entitlement to damages or the dollar amount of damages.
Key points
- Part B Medical Payments covers necessary medical and funeral expenses for covered injuries, without regard to fault or legal liability, if the services are rendered within three years of the accident.
- Medical payments limits apply on a per-person basis for each accident and never compensate for pain, suffering, or lost wages.
- Named insureds and family members can qualify for Part B and Part C coverage while occupying vehicles or as pedestrians, subject to each coverage's conditions and exclusions; other people can qualify while occupying your covered auto, and Part C also covers certain claims arising from bodily injury to an insured.
- Part C Uninsured Motorists coverage pays compensatory damages, including pain and suffering, when an at-fault driver has no insurance, is covered by an insolvent insurer, or is an unidentified hit-and-run driver.
- Vehicles owned by government agencies or owned by the named insured or family members are excluded from the definition of an uninsured motor vehicle.
- Underinsured Motorists coverage protects insureds when an at-fault driver's liability limits are insufficient, applying either an offset approach or an excess approach as permitted by state law.
- When an insured qualifies for medical payments coverage while occupying a non-owned vehicle, coverage under the vehicle's policy is generally primary if it provides medical payments, while applicable coverage under the insured's own policy is excess.
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