Med Pay under the Garage Coverage Form

Our insured is an auto dealer. They were using a dealership owned vehicle to haul a nonowned trailer with a float attached in a local parade. The insured driver strayed from the parade route and struck an overhead tree limb resulting in the float passengers being thrown overboard. Our question is whether or not the auto medical payments coverage applies. The policy has symbol 22 for medical payments. Although the vehicle is owned, the trailer is not.

Symbol 22 describes a covered auto as “only those autos you own (and for liability coverage any trailers you don't own while attached to power units you own). The medical payments coverage form indicates that we have medical payments for covered autos (not defined on the medical payments endorsement). We are confused. My inclination is to provide coverage for medical payments since the vehicle (trailer) is a covered auto for liability, but I am not sure that is correct. What is your opinion?

Indiana Subscriber

We agree with you about the payment. The nonowned trailer was a covered auto as per the symbol used. And, even though the designation says that the covered auto designation is for liability coverage, there are two points about this. First, it does not say for liability coverage only, and second, the way you describe the accident, it appears that a liability claim could be made. So, it would make sense to pay the med pay in order to possibly head off a liability claim.

Of course, med pay is not based on liability, but one of the purposes of med pay is to pay reasonable expenses upfront in order to prevent a liability claim from developing later on. And, since med pay is not based on liability, if the insurer wants to pay it and sees no valid reason to exclude the payments, there should be no problem with making the payments.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis