Canadian Accredited Insurance Broker (CAIB) Three Practice Exam

What is the rationale for providing Medical Payments coverage on a "no fault" basis?

1. To encourage claims for minor injuries

2. To avoid legal confrontations over small expenses

3. Out of generosity to insured parties

4. To simplify the policy

The correct answer is: To avoid legal confrontations over small expenses

Providing Medical Payments coverage on a "no fault" basis primarily serves to avoid legal confrontations over small expenses. This approach ensures that individuals can receive medical care costs without the need to establish fault or liability, thereby streamlining the claims process. This system reduces the burden on both policyholders and insurance companies by mitigating disputes that might arise from minor incidents. By removing the necessity of proving fault for medical expenses, it allows for quicker resolution and payment of claims, thus promoting immediate access to necessary healthcare without the additional stress of legal claims. Additionally, this method decreases administrative costs and enhances efficiency in handling minor injury claims. Other options may suggest reasons such as encouraging claims or simplifying policies, but the core rationale is fundamentally about reducing conflict and ensuring prompt care for the insured parties.