Your church is well-maintained and a beehive of activity, with people constantly buzzing around. Recently, it has had three slip and fall claims that have been paid out under the Medical Payments Coverage section of the church’s insurance policy. John, your insurance agent, has called the church to advise that this claim frequency is causing concern from your insurance company.
How can a small slip, trip, or fall claim (the most common) affect your church policy? Accidents do happen, and losses do occur. What can you, as a good steward, do to proactively limit the potential of a claim? Let’s take a look at Medical Payments Coverage. What is it? What does it do? How will a Medical Payments Coverage claim affect your policy?
A new area of increased claim cost causing larger premium expenses under your policy is Medical Payments to others. This is a sublimit to your main General Liability coverage. The Medical Payment limit is usually $5,000.00 … but it can be higher, lower, or none at all.
Medical Payments Coverage to others is described as follows:
We (the insurance company) will make these payments regardless of fault. These payments will not exceed the applicable limit of insurance.
We will pay reasonable expenses for:
(1) First aid administered at the time of an accident;
(2) Necessary medical, surgical, x-ray and dental services, including prosthetic devices; and
(3) Necessary ambulance, hospital, professional nursing and funeral services.
The first sentence in the coverage description above is key. The insurance company can pay out under the Medical Payments Coverage section of the policy without the insured (in this case, your church) admitting any liability. This is unlike the General Liability section of the policy where the insured (your church) is legally obligated to pay damages.
Every year claims using the Medical Payments Coverage section of insurance policies are rising dramatically. At the same time, medical expenses keep going up and up. What was once a small coverage with a minimal premium charge in your policy is now becoming a small coverage with a large premium charge.
Why is the Medical Payments Coverage section of the insurance policy being used more? A primary reason has to do with the aging population. In the past few years, Medicare has changed the wording under its insurance program stating that any other collectible insurance is primary. In practice, this means that the Medical Payments Coverage of your church’s insurance policy is now the primary coverage until that limit is exceeded. Another reason involves the general trend of health care insurance companies raising deductibles to much higher levels than we have seen in the past.
To put this in perspective, prior to this change the Medical Payments Coverage section of your church’s insurance policy was covering out-of-pocket costs (i.e. the deductible) of the injured claimant. After the injured claimant’s deductible was paid/charged, then the health insurance company of the injured claimant would provide coverage. Now, due to both the change in Medicare wording noted above and health care insurance policy deductibles being substantially higher than they used to be, the Medical Payments Coverage section of your church’s insurance policy is actually paying out more dollars for most of the same slip, trip, and fall claims.
While all claims affect your policy, claims that fall under the Medical Payments Coverage section can add a level of claim frequency and severity that is unexpected and/or unintended. This pattern can cause individual surcharges to your policy and/or cancellation by your insurance company.
What options does your church have? One possibility is to reduce the Medical Payments Coverage limit from the usual $5,000 to a lower limit or perhaps remove this coverage entirely. Call your insurance agent professional to discuss this possibility and any other insurance concerns your church has.