39. Paul falls on premises insured under a Commercial General Liability policy and incurs $2500 in medical expenses. Paul later sues the business and gets a $25000 judgment. Which of the following is correct?
Answer: C
The CGL policy can pay up to $2500 under Coverage C but this amount will be deducted from the amount to be paid under any judgment or settlement under Coverage A.
The Commercial General Liability (CGL) policy provides specific coverage for medical expenses and legal judgments. In this case, the policy allows for coverage of medical expenses under Coverage C, which is capped at $2500, and this amount is deducted from any subsequent payments made under Coverage A for judgments or settlements.
A) The CGL policy will pay either under Coverage A or Coverage C but not both
This option is incorrect because the CGL policy can provide coverage under both Coverage A and Coverage C simultaneously. Coverage C specifically addresses medical expenses incurred due to an accident on the premises, while Coverage A covers bodily injury liability, allowing for payouts from both.
B) The CGL policy can pay up to $1000 under Coverage C and the full amount of any judgment or settlement under Coverage A
This statement is misleading as it incorrectly states the limit for Coverage C. The actual limit is up to $2500, not $1000. While it accurately describes that Coverage A can cover judgments or settlements, it fails to reflect the true limits of Coverage C.
C) The CGL policy can pay up to $2500 under Coverage C but this amount will be deducted from the amount to be paid under any judgment or settlement under Coverage A
This option correctly describes the functioning of the CGL policy. It accurately states the limit for Coverage C and clarifies the deduction process from Coverage A, making it the correct answer.
D) The CGL policy will only pay under Coverage C if no claim is made under Coverage A
This option is incorrect as it implies that a claim under Coverage C is contingent upon no claims being made under Coverage A. In reality, both coverages can be utilized independently, and claims can be made under both without one affecting the other.
Conclusion
The correct answer, option C, accurately reflects the coverage structure of the CGL policy, highlighting both the limit for Coverage C and the deduction from Coverage A. Options A, B, and D fail to accurately represent the terms of the policy, either by providing incorrect limits or misunderstanding the relationship between the two coverages. Thus, understanding the nuances of coverage within a CGL policy is crucial for accurately assessing liability and claims.