Medical Payments to Others (CGL, Coverage C)
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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...
UPDATED: Jun 28, 2022
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Medical Payments to Others is part C of the Commercial General Liability (CGL) policy related to commercial insurance.
It is a type of no-fault coverage for bodily injury. No-fault insurance is designed to be good will coverage in which fault doesn’t have to be proven in order to pay for damages resulting from bodily injury claims.
It is designed primarily to protect the insured and insurer against lawsuits for negligence.
Medical payments to others, as the name implies, is not insurance for the policyholder or employees. Employees are always insured through workers compensation.
Similar to medical payments on a homeowner’s policy, this coverage part of the CGL extends certain benefits to a person injured on your premises or as a result of your day-to-day business operations.
These benefits include necessary surgical, medical, and dental services as well as funeral expenses if death results from the claim. There are some exclusions however, and it doesn’t cover you or your business from additional courses of action that the customer may take.
What is a good example of CGL coverage option C?
Imagine you own a furniture store, going through the daily motion of the usual business operations. Perhaps a shopper falls into a glass top table, breaking it and causing a physical injury by cutting their arm, requiring a trip to the emergency room and fifteen stitches.
Your medical payments coverage would pay for all the expenses incurred as a result of the fall. But keep reading because there’s a little more to it.
Luckily, there is no need to prove you are negligent as the store owner; you would simply file a claim and the insurer would pay for the damages.
But be sure to note in the example above that the insurance company is not acknowledging responsibility for the injury when they extend the benefits. Yes, unfortunately there are limits of insurance, especially in this case, and you would be in good shape to know what those limits are.
Additionally, the injured party still retains the right to sue you for negligence and collect benefits by settling out of court or procuring a judgment against you if they choose to. And even if it wasn’t done on purpose, a person can still come after you with malicious prosecution in mind.
But the hope of most insurance companies, and the person in charge of the store, is that the injured party will be satisfied with simply having their medical bills paid.
If you were sued, the claim would be processed under the liability portion of your CGL. The medical payments coverage part of the CGL does not deal with liability, so that’s completely separate from any other legal obligation you’d have on your plate.
The liability coverage parts are included in premises and operations, products and completed operations, and personal injury. This is something worth looking into for most business owners. As with any sort of livelihood, having protection against the business risks that are out there is always a good idea financially. That way you’re not going to be on the hook for more than you can afford.