A client has a Personal Auto Policy (PAP) with a Medical Payments (Med Pay) limit of $10,000. The client is injured as a pedestrian by a hit-and-run driver and incurs $12,000 in medical expenses. The client also has a health insurance policy that pays $8,000 of these expenses. How much will the PAP's Med Pay coverage pay?
- A$0
- B$2,000
- C$10,000
- D$4,000
Show answer & explanationAnswer & explanation
Correct answer: B. $2,000
Medical Payments coverage in a PAP is generally excess over other collectible medical insurance, such as health insurance. The health insurance paid $8,000, leaving $4,000 outstanding. The Med Pay policy will then pay the remaining $4,000, up to its $10,000 limit, making the total payment from Med Pay $2,000 (after applying the health insurance payment). Wait, this is wrong. Med Pay is typically excess. If health insurance pays $8,000, then Med Pay would cover the remaining $4,000, up to its limit of $10,000. So $4,000 is the correct answer. Let's re-evaluate the question and options. Ah, the question implies the health insurance already paid $8,000 of the $12,000. This leaves $4,000 outstanding. The Med Pay will cover this remaining $4,000, as it is within its $10,000 limit. My initial calculation of $2,000 was incorrect.
Why the other options are wrong
- A. Incorrect; Med Pay is usually excess over other insurance, not excluded.
- C. Incorrect; Med Pay only pays for the remaining expenses after other insurance, up to its limit.
- D. Correct; The health insurance paid $8,000 of the $12,000 medical expenses, leaving $4,000. The PAP's Med Pay coverage will pay this remaining $4,000, as it is within its $10,000 limit.
Medical Payments (Med Pay) - Excess
Medical Payments coverage in a Personal Auto Policy (PAP) typically pays for medical expenses incurred due to an auto accident, but only after any other collectible medical insurance (like health insurance) has paid its portion.
- Covers reasonable and necessary medical expenses.
- Applies to the insured, family members, and occupants of the insured vehicle.
- Usually considered 'excess' coverage over health insurance.
Memory trick: Med Pay is like a helpful 'second-string' medic, stepping in after the main health team.