Property & Casualty Insurance Exam (National Portion)Casualty InsuranceEasy
A client's Personal Auto Policy (PAP) includes a Medical Payments (Med Pay) limit of $5,000. The client is injured in an accident and incurs $7,000 in medical bills. Their own health insurance pays $4,000. How much will the client's Med Pay coverage pay?
- A$0
- B$5,000
- C$1,000
- D$3,000
Show answer & explanationAnswer & explanation
Correct answer: B. $5,000
Medical Payments (Med Pay) coverage typically pays without regard to fault and is often primary or equal to other medical coverage, up to its stated limit. In this scenario, the Med Pay will pay its full limit of $5,000, as the medical bills exceed this amount.
Why the other options are wrong
- A. This is incorrect; Med Pay is designed to cover medical expenses.
- C. This incorrectly assumes Med Pay is secondary or pays only the remaining balance after health insurance.
- D. This incorrectly assumes Med Pay coordinates benefits with health insurance in a subtractive manner.
Medical Payments (Med Pay) - Primary Coverage
Medical Payments (Med Pay) in an auto policy provides coverage for reasonable and necessary medical and funeral expenses incurred by an insured due to an auto accident, typically without regard to fault and often as primary coverage up to its limit.
- Covers medical and funeral expenses.
- Paid regardless of who is at fault.
- Often primary coverage, meaning it pays before other insurance like health insurance.
- Subject to a per-person limit.
Memory trick: Med Pay is for IMMEDIATE medical bills, no questions asked, up to its limit.