Most general liability policies, including the standard ISO policy, include a coverage called Medical Payments. This coverage is typically designated Coverage C.

Medical Payments is a no-fault coverage. This means that an injured person can obtain reimbursement for medical expenses under Coverage C without filing a lawsuit. Medical expenses are covered whether or not you are liable for the injury. Thus, Coverage C differs substantially from Coverage A (Bodily Injury and Property Damage Liability) and Coverage B (Personal and Advertising Injury).

Coverages A and B apply only if you (or another insured) are liable for an injury to a third party that has filed a claim or suit.

Medical Payments Coverage is intended to serve as a hedge against lawsuits. It affords prompt payment of medical expenses incurred by an injured individual. These payments may dissuade the injured party from filing a lawsuit against you.

Covered Expenses

Medical Expense coverage pays "reasonable" expenses for first aid that is rendered at the time of an accident. For example, suppose that Jim, a customer, falls on your property and breaks his arm. You rush Jim to a doctor, who provides first aid. The physician diagnoses a broken arm and directs Jim to a hospital. The cost of the office visit would likely be covered as a first aid expense. Also covered are any necessary medical, surgical, x-ray and dental services, including prosthetic devices. For instance, if Jim incurs costs for an X-ray and medical treatment at a hospital, those costs should be covered.

If the injured party is transported to a hospital, your Medical Payments coverage will pay for the ambulance as well as any hospital or nursing services that are required.

If the injured party dies, the cost of funeral services is covered.

Where Coverage Applies

Coverage C covers medical expenses incurred by a person who has sustained bodily injury caused by an accident (like Jim's) that happens on your premises. Expenses that result from accidents that occur in an area immediately adjacent to your premises, such as on a sidewalk or parking lot, are covered as well. In addition, Coverage C covers injuries caused by accidents that take place away from your premises if the accidents occur because of your operations.

For example, suppose that you operate an electrical contracting business. You are at a job site stringing electrical cord when Susan, a visitor to the site, accidentally trips over the cord. Susan falls and sprains her ankle. Because Susan's injury was caused by an accident that resulted from your operations, her medical expenses should be covered by your liability policy under Coverage C.

To be covered, the accident must take place in the coverage territory and during the policy period of your policy. In addition, the expenses must be incurred and reported to the insurer within one year of the accident date. For example, suppose that Susan's accident took place on April 1, 2014. To be covered under your policy, the expenses Susan incurs in treating her sprained ankle must be incurred by April 1 of 2015. You must submit these expenses to your insurer by April 1, 2015 as well.

Intended for Minor Injuries

Medical Payments coverage is subject to a sublimit (a limit that is lower than the policy limit) that applies to each person. This limit is typically low, such as $10,000. Thus, Medical Payments coverage is intended for relatively minor injuries, such as an ankle sprain resulting from a slip-and-fall.

In addition to the Each Person limit, medical expenses that are covered under Coverage C are subject to the Each Occurrence and the General Aggregate limits in your liability policy. For example, suppose that Susan incurs $8900 in medical bills related to her sprained ankle. Your insurer reimburses Susan for these costs under your Medical Payments coverage. Susan then files a lawsuit against your company that seeks $25,000 in damages.

Any damages or settlement your insurer pays as a result of the lawsuit will reduce both the Each Occurrence and the General Aggregate limits in your policy. The $8900 your insurer paid under Medical Payments will reduce these limits as well. The $8900 in medical expenses will also reduce the Each Person limit scheduled in your policy for Medical Payments.

Exclusions

All of the exclusions that are listed under Coverage A, Bodily Injury and Property Damage Liability, (such as employers liability and contractual liability) apply to Medical Payments coverage. The following additional exclusions also apply:

• Injury to an Insured With one exception, medical expenses incurred by anyone who qualifies as an insured under your liability policy are not covered. An exception applies to medical expenses incurred by volunteer workers. These expenses are covered.
• Anyone Hired by You No coverage applies to injuries incurred by someone hired by you or any other insured.
• Occupier of the Premises If a person normally occupies premises you own or rent and is injured on those premises, any expenses resulting from that injury are not covered. For example, suppose that Fred leases office space in a building you own. If Fred is injured in his rented space, your Medical Payments coverage will not cover medical expenses related to his injuries.
• Injuries Covered by Workers Compensation If the injured party is entitled to workers compensation benefits under a policy purchased by you or anyone else, the injury is not covered by your Medical Payments coverage. In most states, workers compensation benefits are intended to serve as an exclusive remedy for employment-related injuries.
• Athletic Activities No coverage applies to anyone injured while practicing, instructing
  or participating in any physical exercises or games, sports, or athletic contests. For instance, suppose that a spouse of your employee is injured while playing softball on a team sponsored by your company. If the injured spouse incurs medical expenses as a result of the injury, those expenses are unlikely to be covered under your Medical Payments coverage.
• Products-completed Operations No coverage applies to injuries to third parties if the injuries are caused by accidents arising our of your products or completed work. Such injuries are covered by products-completed operations coverage, which is included under Coverage A.