Civil Litigation Legal Topics Tort Law

Demystifying Medical Coverage in Auto Policies

Do you understand medical expense coverage on an automobile insurance policy? It can be very confusing, particularly as to what it covers and how other coverage may impact it. Here are the basics on medical coverage in auto policies, which will hopefully clarify its purpose and help you get the most for your clients with this type of coverage.

Under medical expense coverage, commonly called med-pay, an insurer agrees to pay, regardless of fault, for reasonable medical and funeral services for an insured’s injuries caused by certain motor vehicle accidents. This is optional coverage and is not required by statute.

The purpose of the med-pay coverage is to provide an additional source of funds for medical expenses for individuals injured in automobile accidents without having to establish liability. Nager v Allstate Ins. Co. (2000) 83 CA4th 284, 290, 99 CR2d 348. There’s some variation in language among policies in the list of medical services covered.

The amount of med-pay coverage is limited in two respects: (1) maximum limits of liability are set out in the policy declarations, and (2) expenses are covered only for a limited amount of time after an accident.

As an attorney, you need to carefully review the particular policy involved in your case to assess the limitations on medical expense coverage. Although historically medical expense coverage was limited to expenses incurred within 1 year of an accident, more recently policies have been extended to provide such coverage for considerably longer periods. Also verify that the medical expenses incurred are because of injuries suffered as a result of the accident.

Under the typical family automobile policy, the named insured and any relative residing in the named insured’s household are covered under the med-pay provision if occupying or if struck by certain motor vehicles. Injuries occurring in the owned automobile designated in a policy are covered, but to be covered for injuries occurring in a nonowned automobile, a prospective insured may be required to have the owner’s permission to use a vehicle or show that he or she reasonably believed he or she had such permission.

Persons other than the named insured and relatives residing in the named insured’s household are normally covered under med-pay coverage if they are occupying:

  • Owned automobiles, if they are used by the named insured, or other persons with his or her permission;
  • Nonowned automobiles, if the injury results from the operation or occupancy by the named insured or the insured’s private chauffeur or domestic servant; the policy may require the operation or occupancy to be with the owner’s permission; and
  • Nonowned automobiles, if the injury results from the operation or occupancy of a private passenger automobile or trailer by a relative of the named insured’s household; some policies require the owner’s permission.

The typical family automobile policy excludes med-pay coverage in a number of situations, such as
when the vehicle occupied is being used as a residence or premises. Coverage also may be excluded in whole or in part if there are other sources of payment for an injury, e.g., some policies state that there is no med-pay coverage if the insured is to be paid under the provisions of any automobile or premises insurance affording benefits for medical expenses.

Note that Med-pay coverage often overlaps uninsured motorist coverage, and Med-pay coverage typically contains an “other insurance” clause providing for proportionate payment with other automobile medical payment insurance except when nonowned or temporary substitute automobiles are involved. Many policies also exclude coverage if worker’s compensation benefits are payable or required, and a policy may also provide for an offset of worker’s compensation benefits.

To help you understand all aspects of auto insurance first party coverages, turn to CEB’s California Automobile Insurance Law Guide, chap 7.

© The Regents of the University of California, 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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