The medical payments coverage is virtually a no-fault, low-limit bodily injury coverage. In order to be entitled to payment under the medical payments coverage, the injured person must comply with certain requirements. These are to:
This condition provides that payment of benefits under medical payments coverage does not constitute an admission of liability by either the insurer or the insured. This condition is very important. Many claims handled under the medical payments coverage never evolve into lawsuits. In some cases, however, a lawsuit does follow, often where the injured party's damages exceed the limits of liability of the medical payments coverage.
Because of that risk, it would be imprudent for either an insured or an insurer to agree to make a payment under the medical payments coverage. That is, unless it is understood that such a payment does not constitute an admission of liability and cannot be used as evidence by the injured party.
This is actually a set of three conditions. The first condition provides that no action can be brought against the insurer unless there has been full compliance with the terms and conditions of the liability coverages. As with the similar property condition, this provision cannot prevent an insured from suing his or her insurer. This provision provides the insurer with the contractual basis for relying on the insured's failure to comply with all the insured's obligations, such as under the notice and voluntary payment provisions, as a defense to the lawsuit.
The second of this set of conditions provides that no one has the right to join the insurer as a party to a lawsuit against any insured. This condition serves two similar purposes. Under the law of most states, evidence that a defendant has insurance that may respond to and pay a judgment is inadmissible in the lawsuit against the insured. Consideration of such evidence could cause a jury to award damages against a defendant when the evidence does not support liability, merely because the dollars to pay the judgment would not be coming directly out of the defendant's pocket.
The third of this set of conditions provide that no action can be brought against the insurer until the insured's obligation to the claimant has been determined by final judgment or settlement agreement that has been signed by the insurer. This condition is intended to protect the insurer from claims in which the claimant and insured have acted in collusion to the detriment of the insurer, as well as the insurer's right to control the defense and settlement of claims and lawsuits.
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