A client owns a small artisan business and has a Commercial General Liability (CGL) policy. A customer slips and falls on a wet floor inside the client's shop, breaking an arm. The customer incurs $15,000 in medical bills and wants to avoid a lawsuit. The client's CGL policy has Coverage C - Medical Payments with a limit of $5,000 per person. How much will the CGL policy pay under Coverage C for the medical bills?
- A$5,000
- B$10,000
- C$15,000
- D$0
Show answer & explanationAnswer & explanation
Correct answer: A. $5,000
CGL Coverage C (Medical Payments) is designed to pay for medical expenses for injuries sustained on the insured's premises or due to the insured's operations, regardless of fault. It is typically a small, 'goodwill' payment to avoid litigation. The payout is limited by the 'per person' limit, which is $5,000 in this case, even though the actual bills are higher.
Why the other options are wrong
- B. Incorrect; this amount exceeds the Coverage C per-person limit.
- C. Incorrect; this is the full medical bill amount, which exceeds the Coverage C limit.
- D. Incorrect; Coverage C is specifically designed for such incidents.
CGL Coverage C - Medical Payments
Part of a Commercial General Liability (CGL) policy that pays for medical expenses for bodily injury to a person (other than an insured) caused by an accident on the insured's premises or due to the insured's operations, without regard to legal liability.
- Pays medical expenses regardless of fault.
- Designed to quickly resolve minor injuries and avoid lawsuits.
- Subject to a 'per person' limit and an aggregate limit.
Memory trick: CGL Med Pay is the 'goodwill gesture' for minor slips, paying quickly to avoid a bigger legal headache.