(October 2019)
The Business Auto, Auto Dealer, and Motor Carrier
Coverage Forms do not contain automatic coverage for auto medical payments. If the
coverage is desired, it is provided by attaching CA 99 03–Auto Medical Payments
Coverage to the policy.
Auto Medical Payments Coverage is designed to cover
reasonable and necessary medical and funeral expenses for an injured person who
is considered an insured. It is important to remember that this coverage is not
for the injured individuals that are in another vehicle. Coverage applies only
to individuals who are considered insureds as defined later in this analysis.
The reasonable expenses an insured (as defined later in the endorsement) incurs for necessary medical and funeral services when they are due to bodily injury caused by a covered accident. Only expenses that are incurred within three years of the date of the accident are covered.
Only insureds can receive payments under this endorsement. There are three types of insured:
1. The named insured is an insured while occupying any auto. This is in, on, getting in, on, out, or off any auto. The named insured is an insured if struck by an auto while a pedestrian.
Note: This technically applies only to an individual named insured. Corporations, associations, partnerships, and limited liability companies are legal entities and not persons. As a result, they cannot literally occupy a vehicle or sustain injuries.
2. The family members of the named insured are insureds but only if the named insured’s form of business is individual. Each family member is an insured while occupying any auto or when, as a pedestrian, is struck by an auto.
3. Any other person who is not defined in items 1. or 2. while he or she is occupying a covered auto. If a covered auto is out of service and a person is occupying a temporary substitute of a covered auto, that person is also an insured.
Coverage does not apply to:
1. Bodily injury an insured sustains while occupying a vehicle that is not being operated as an auto but instead is being used as premises.
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Example: The named insured, an individual, owns a motor home used for camping. Scenario 1: While the motor home is parked at a campsite for the night, the named insured’s daughter, Winnie, falls from a bunk and injures her head. Medical payments coverage does not apply in this case because the accident took place on a "premises." Scenario 2: The named insured parks the family motor home at a roadside restaurant so the vacationing family can eat lunch. Winnie trips and severely twists her knee as she is exiting the motor home, and she is taken to a clinic in a nearby town for emergency treatment. Medical payments coverage applies because the motor home was not being used as a premises at the time of the injury. |
Note: This exclusion raises one concern. The terms “located” and “premises” are not clearly defined and the point at which a covered vehicle “locates” and becomes a "premises" is unclear.
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Examples: A driver becomes drowsy and pulls off on the side of the road, needing a few hours sleep to avoid possibly being involved in an accident. In this case, the vehicle is still considered a motor vehicle and not a premises and the exclusion would not apply. However, it serves to illustrate a potential claims problem based on the exact moment or the circumstances under which a covered auto becomes a premises and auto medical payments coverage does not apply. A company purchases a motor home for its sales team to use to travel to conventions and make sales calls. They travel cross-country, stopping at various sites along the way and arrive at one of their destinations for the evening. At what point does the motor home "locate" and become a “premises?" Is it when the engine is turned off at the camp or rest site, when the motor home is hooked up to the utilities for the night, or another time? |
Note: There is no clear-cut solution and each situation must be evaluated on its own merits and based on the specific facts of the case.
2. & 3. These two exclusions are similar and are analyzed together. Medical expenses for bodily injury the named insured or his or her family members sustain are not covered if the injured person occupies or is struck by any vehicle that is not a covered auto and that is owned, furnished, or available to the named insured or his or her family members for regular use. The coverage form or policy that provides liability coverage on the vehicle must also be the one that provides auto medical payments coverage.
Note: These exclusions attempt to eliminate duplicate coverage and primary versus excess claims handling situations.
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Example: Sue owns a landscaping business and insures her pick-up under the Business Auto Coverage Form in the name of Sue Smith d/b/a Suescaping Ltd., including CA 99 03–Auto Medical Payments Coverage. Jim, Sue’s husband, has a company auto his employer provides and insures. When Jim backs out of the garage and strikes Sue, Sue cannot recover medical payments under this endorsement. |
4. This very important exclusion applies to any bodily injury to an employee of the insured that arises out of and in the course of employment. This exclusion is intended to prevent duplication and overlap with workers compensation coverage.
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Examples: Paul, an employee of Wise Moves, uses a covered auto to make a delivery and sustains a broken wrist when he is involved in a minor accident. Medical Payments Coverage does not apply to this injury because workers compensation should handle it. Paul receives permission to use the company pickup truck to move to a new apartment over the weekend. An accident occurs, resulting in a minor injury to the Paul. In this case, Medical Payments Coverage applies because the injury was not work-related, even though the Paul was the named insured's employee. |
There is a significant exception to this exclusion. When the named insured employs domestic workers not entitled to workers compensation benefits, they are an exception to the exclusion and are covered.
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Example: Sheila hires Pam as a nanny to help with her children so that Sheila can run her business. Workers compensation laws in the state where Sheila lives do not cover domestic employees. Pam is injured in a collision while returning to Sheila’s home after dropping the children off at school. Her injuries are covered. |
Coverage does not apply if the named insured lives in a state where workers compensation for domestic employees is optional or even required, whether it was purchased or not.
5. There is no coverage when the bodily injury is sustained by an insured who is working in a business that sells, repairs, services or parks autos when that business is not the named insured's own business.
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Example: Jake dropped his company car at Phil’s
Service. Phil takes that car for a test drive and strikes a pole. Phil has no
coverage under Jake’s company’s medical payment because Phil was working in a
business that repairs autos. |
Note: Once again, the intent is to prevent duplicate payments and overlap with workers compensation laws and coverages. The workers compensation policy purchased by the named insured’s employer should cover such injuries.
6. This exclusion unequivocally excludes bodily injury related to war and similar military events. It is not affected by circumstances such as a formal declaration of war, that the war is a civil uprising, whether it involves government or civilian participants.
Note: The bottom line is that there is no coverage
for loss related either directly or indirectly to war or warlike activity.
7. Bodily injury to
anyone who is using a vehicle when that person does not believe he or she has a
right to do so. Note: This
exclusion is modified somewhat by adding the word reasonable. A person is
covered when his or her belief is reasonable.
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Example: The licensed teen-age daughter of a named insured may reasonably believe that she is entitled to drive an auto owned by her family's business even though her parents have never given her explicit written or verbal permission to do so. However, if she was unlicensed and was never allowed to drive a family auto, it could be argued that driving an auto would be without permission. |
8. Any injury an insured sustains while occupying any covered auto that is being used in, prepared, or that is practicing for any professional racing contest, demolition contest, or stunt activity is not covered.
The Auto Medical Payments Coverage limit of insurance on the declarations is the most paid for bodily injury for each insured injured in any one accident. This is unaffected by the number of vehicles or autos covered, the number of insureds, the premium paid, the number of claims filed, or autos involved in an accident.
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Example: The Auto Medical Payments Coverage limit is $1,000. The named insured and his two business guests riding with him were rear-ended while stopped at a traffic light. The named insured’s auto was pushed into the intersection and struck by two other autos. The most the named insured and each business guest can collect is $1,000 each even though a number of vehicles struck the named insured's auto. |
Note: This is subject to an important limitation. No one may collect or receive duplicate payments for the same accident or elements of a loss under this coverage and under any other Liability Coverage or Uninsured/Underinsured Motorists Coverage forming a part of this coverage form or policy. In other words, an insured guest cannot collect two or more times for the same injury under separate coverages within the same insurance coverage form and thereby profit from the accident.
This endorsement changes two Coverage Form Conditions.
1. The Transfer of Rights of Recovery Against Others to Us Condition does not apply.
Note: This means that the insurance company cannot subrogate a covered auto medical payments loss because doing so defeats the purpose of this coverage.
2. It amends the reference to other collectible insurance in Other Insurance in the Business Auto and Auto Dealers Coverage Forms and Other Insurance–Primary and Excess Insurance Provisions in the Motor Carrier Coverage Form. As a result, this endorsement is excess over any other Auto Medical Payments Coverage that applies to an accident. If two or more Auto Medical Payments Coverages apply to a given loss, both share it on a pro-rata basis.
This endorsement adds two definitions.
Family member is a person related to the named insured by blood, marriage, or adoption and includes the named insured's wards or foster children. Family members must reside in the named insured’s household to be covered.
Occupying means in, upon, getting in, on, out or off.
Does this endorsement's auto medical payments coverage apply to hired vehicles added mid-term? The answer is a qualified yes. Auto Medical Payments Coverage is broad enough that it applies to hired vehicles. However, the injured person must qualify as an insured and involve a covered accident.