Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
A client has a Personal Auto Policy (PAP) that includes Medical Payments (Med Pay) coverage with a limit of $10,000. After an accident, the client incurs $15,000 in medical expenses. Their health insurance policy pays $8,000 of these expenses. Assuming the Med Pay coverage is primary, how much will the PAP's Medical Payments coverage pay?
- A$0
- B$2,000
- C$10,000
- D$7,000
Show answer & explanationAnswer & explanation
Correct answer: C. $10,000
If the Med Pay coverage is primary, it pays first up to its limit, regardless of other insurance. The client's medical expenses are $15,000, and the Med Pay limit is $10,000. Therefore, the Med Pay coverage will pay its full limit of $10,000.
Why the other options are wrong
- A. Med Pay coverage is designed to pay for these expenses.
- B. This would be the amount if Med Pay were excess and only covered the remainder after health insurance, but it is stated as primary.
- D. This is the amount remaining after health insurance, but Med Pay is primary and pays first up to its limit.
Med Pay Primary Coverage
When Medical Payments (Med Pay) coverage in an auto policy is designated as primary, it pays for covered medical expenses first, up to its limit, before any other health insurance policies contribute.
- Pays first, regardless of other insurance.
- Covers reasonable medical and funeral expenses.
- Subject to a stated policy limit.
Memory trick: Primary Med Pay acts like a 'first responder' for your medical bills, paying its full share before anyone else.