"I’m a General Contractor who recently purchased a General Liability insurance policy for the first time. I was told I was getting $1 Million limits, but when I received my policy I saw that it says $5,000 for Medical Expenses. I bought this policy to protect myself from other people getting hurt on my job site or as a result of my work, but $5,000 certainly won’t protect me from any serious injuries to others. Why is this limit so low?"
This is a common question that arises when somebody looks at the Declarations Page of their General Liability Insurance policy for the first time. Coverage C, Medical Expenses is a first aid coverage to 3rd parties on a no fault, per person basis. This coverage covers medical expenses such as ambulance, x-rays, stitches, and dental services. These expenses are paid immediately, up to the Medical Expense Limit and as long as the injury isn’t a result of an exclusion in the policy. Any medical expenses that exceed the Medical Expense Limit would then come out of the Coverage A, Property Damage and Bodily Injury Limit, as long as the insured had fault in the injury to the 3rd party. The theory behind the Medical Expense Limit is that if first aid is provided immediately to an injured party, you will promote goodwill to the injured party and reduce the likelihood of lawsuits.
For example: You are installing a window at a coffee shop when you drop the window and pieces of glass shatter and cut 2 people resulting in them needing stitches. Your General liability policy will immediately provide both of them with medical expenses up to $5,000 per person for the stitches in hopes to avoid further litigation. If one of the people still moves forward and files a claim for their injury, your Coverage A would cover expenses up to the Occurrence policy limit (typically $1 million).
Another example: You’re a contractor who is working at a strip mall. While you’re on lunch you left a power cord out against the building in what you thought was a safe place away from foot traffic. Unfortunately, somebody still tripped while walking by. Your Coverage C, Medical Expenses will immediately cover any first aid up to $5,000. There will be no question of who is at fault or if you are really liable for their lack of awareness.
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By DJ McKenna, CLCS, CRIS