Property & Casualty Insurance Exam (National Portion)Casualty InsuranceMedium
A client's business has a Commercial General Liability (CGL) policy. A customer slips and falls on a wet floor inside the business, sustaining a minor injury that requires emergency room treatment. The CGL policy has a Medical Payments (Coverage C) limit of $10,000. The customer's medical bills total $8,000. What is the maximum the CGL policy will pay under Medical Payments (Coverage C) for this claim?
- A$10,000
- B$8,000, but only if the business is proven negligent
- C$8,000
- D$0, as there is no legal liability established yet
Show answer & explanationAnswer & explanation
Correct answer: C. $8,000
CGL Coverage C (Medical Payments) pays for medical expenses for injuries occurring on the insured's premises or due to their operations, regardless of fault or legal liability. Since the medical bills are $8,000 and are within the $10,000 limit, the policy will pay the full $8,000.
Why the other options are wrong
- A. This is the policy limit, but the actual expenses are less than the limit.
- B. Medical Payments coverage is a 'goodwill' coverage that pays regardless of negligence or legal fault.
- D. Medical Payments coverage typically pays regardless of fault, so legal liability does not need to be established.
CGL Coverage C - Medical Payments
A section of the Commercial General Liability (CGL) policy that provides coverage for reasonable medical expenses for bodily injury caused by an accident on the insured's premises or due to the insured's operations, regardless of legal liability.
- Pays regardless of fault.
- For minor injuries to others.
- Promotes goodwill, avoids lawsuits.
- Has a per-person limit.
Memory trick: Helping hands, no questions asked.