Medical payments coverage is essentially a low-limit, no-fault coverage intended to deal with low-value bodily injury claims on a quick and informal basis. Typical medical payments limits of liability range between $1,000 and $10,000 per person, per accident. The medical payments coverage of homeowners policies is generally included as part of the basic policy premium without any separate or additional premium. The insuring agreement of the medical payments coverage of the ISO HO 3 homeowners policy provides that the insurer will pay necessary medical expenses that are incurred or are medically ascertained within three years from the date of an accident that causes bodily injury. Medical expenses are defined as reasonable charges for medical, surgical, X-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral expenses. The medical payments coverage does not apply to persons insured under the policy. For medical payments coverage to apply, the person seeking payment must have been on an insured location with the permission of an insured. The medical payments coverage also applies to a person off an insured location if the bodily injury in question: ◆ arises out of conditions on the insured location or on the ways immediately adjoining (i.e., streets, roads, sidewalks, etc.,); and, ◆ is caused by the activities of an insured; or ◆ is caused by a residence employee (housekeeper, gardener, nanny, etc.) in the course of the residence employee’s employment by an insured; or, ◆ is caused by an animal owned or in the care of an insured. Medical payments coverage usually does not vary greatly from one insurer to another due to the relatively low exposure to loss that such provisions present to insurers. Nonetheless, the medical payments coverages present a valuable resource in the event of a minor injury occurring to someone on your premises that comes within the scope of that coverage. Often, in such cases, prompt payment by your insurer under the medical payments coverages may 110 The Complete Book of Insurance help to avoid a later lawsuit. The prompt attention to the situation and prompt payment of the injured party’s medical bills can take some of the sting out of an accident, leaving the injured parties less disposed to sue. The medical payments coverage is limited by exclusions and will be reviewed in the discussion of all the exclusions that apply to a homeowner’s liability coverages in Chapter 10. ADDITIONAL COVERAGES Liability coverages also have some additional coverages. Some of these additional coverages can be significant in their impact. Claims Expenses The first category listed under additional coverages is claims expenses. These are items that relate primarily to the defense of lawsuits. There are four subcategories of claims expenses that are covered. First, they include expenses the insurer incurs (this includes the fees and expenses of defense counsel plus costs taxed against the insured such as: ◆ filing fees; ◆ jury fees; ◆ deposition costs; ◆ costs of service of process; ◆ witness fees; ◆ transcripts of court proceedings; ◆ photocopying costs; and, ◆ attorneys’ fees. Second, the liability additional coverages include coverage for premiums for bonds required in suits that the insured appeals. The most likely application of this provision is if there is an adverse judgment against the insured and a decision is made to appeal the judgment. Universally, in order to prevent the winning party from collecting on his or her judgment while the case Liability Coverages 111 is on appeal, the losing party must post an appeal bond. If an appeal bond is posted, the winning party cannot engage in collection efforts until the appeal has been decided. Appeal bonds are not cheap. An appeal bond usually must be posted in an amount ranging from 150% to 200% of the amount of the judgment. This is to cover the judgment as well as the interest accruing on the judgment while the appeal remains pending. Further, an insurer is required only to pay for the premium for an appeal bond, not to provide the collateral for the 150% to 200% bond amount. If the amount of the judgment against the insured exceeds the liability policy limit, the insurer is only required to pay that portion of the premium for the appeal bond that is in proportion to the amount of the judgment within policy limits. As a practical matter, the fact that an insurer has no obligation to collateralize an appeal bond is a reason why many adverse judgments against insureds are paid, no appeal is taken, and the case ends. A great many insureds are simply unable, or unwilling, to post collateral for an appeal bond, particularly when there is a substantial risk that the insured could become liable on the bond and forfeit the collateral. Third, claim expenses coverage includes reasonable expenses incurred by an insured at the insurer’s request. This includes actual loss of earnings, up to $250 per day, for assisting the insurer (and hired defense counsel) in the investigation or defense of a suit. Fourth, the liability additional coverages include postjudgment interest that accrues prior to the time the insurer either pays the judgment or pays a court that portion of the judgment for which the insurer does not contest coverage. First Aid Expenses The next category of liability additional coverages is for first aid expenses incurred by an insured for covered bodily injury. This coverage excludes first aid expenses for bodily injury to an insured, and is in addition to both the personal liability limit as well as the separate limit applicable to the medical payments coverage. First aid is not defined in the policy and should be interpreted according to its ordinary meaning. 112 The Complete Book of Insurance Damage to Property of Others This additional coverage extends coverage on a replacement cost basis, up to $1,000 per occurrence for property damage to property of others caused by an insured. There are some exclusions to this coverage. This additional coverage does not apply to any loss to the extent it is payable under the first-party property coverages of the policy, nor to loss to property owned by an insured. Property damage that is caused intentionally by an insured over the age of thirteen is also not covered. This additional coverage also excludes coverage for property damage to property owned by or rented to a tenant of an insured or resident of the named insured’s household. The damage to property of others coverage does not apply to loss arising out of an insured’s business, out of premises owned, granted, or controlled by an insured other than the insured location, or out of the ownership, maintenance, occupancy, operation, use, loading or unloading of aircraft, watercraft, hovercraft, or motor vehicles. Loss Assessment The loss assessment additional coverage provides for up to $1,000 for the named insured’s share of a loss assessment charged against the named insured as owner or tenant of the residence premises by a condominium, homeowners, or cooperative association. This covers situations when the assessment is the result of covered bodily injury, property damage, or liability for a director, officer, or trustee while acting in that capacity. The person must have been elected by the association’s members and services without pay. This additional coverage has some qualifications and limitations. The policy period condition does not apply—loss assessments imposed on members by homeowners associations virtually always occur long after the event that ultimately gives rise to the assessment takes place. The policy makes clear that the $1,000 limit applies to all loss arising out of any one accident or covered act of a board member, regardless of the number of assessments imposed. Liability Coverages 113 EXAMPLE: If a board were to impose a $100 a month assessment arising out of one accident for a period of 15 months, the maximum amount recoverable by the insured would be $1,000. If the board were to impose a $100 per month assessment for a period of five months, and then six months later, impose a $100 per month assessment for a period of ten months arising out of a second and separate accident, the amount recoverable would be $1,500. This additional coverage expressly excludes coverage for assessments charged against the named insured or the homeowners association by any governmental body. Thus, if your city imposes an improvement assessment for street repaving or some other project, no coverage exists under this provision. 

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