Key Takeaways
- Coverage E (Personal Liability) protects against lawsuits for bodily injury or property damage caused by the insured — standard limit is $100,000 but can be increased
- Coverage F (Medical Payments to Others) is NO-FAULT coverage — pays regardless of who is at fault for guests injured on the property
- Coverage E provides WORLDWIDE coverage — protects you anywhere in the world, not just at home
- Medical Payments (Coverage F) has low limits ($1,000-$5,000) and is designed for minor injuries to prevent lawsuits
- Defense costs under Coverage E are paid IN ADDITION to the policy limit — the insurer pays to defend even groundless claims
Section II: Liability Coverages
Section II protects you when you're legally responsible for injuring someone or damaging their property. These coverages can prevent financial devastation from lawsuits.
Coverage E: Personal Liability
Protection against lawsuits
What Coverage E Protects
Coverage E pays when you are legally liable for:
| Type of Damage | Examples |
|---|---|
| Bodily Injury (BI) | Guest falls on your icy sidewalk, dog bites neighbor |
| Property Damage (PD) | Your tree falls on neighbor's car, child breaks neighbor's window |
Standard Limits
| Common Limit | Who It's For |
|---|---|
| $100,000 | Standard (minimum recommended) |
| $300,000 | Better protection |
| $500,000 | Good for homeowners |
| $1,000,000+ | High net worth (consider umbrella) |
Key Features of Coverage E
1. Worldwide Coverage
Coverage E protects you anywhere in the world, not just at your home.
Examples:
- You injure someone while golfing in Scotland — covered
- Your shopping cart damages a car in a parking lot — covered
- Your child breaks a window at school — covered
2. Defense Costs Paid Separately
The insurer pays to defend you in addition to the policy limit.
Example:
- Policy limit: $300,000
- Defense costs: $50,000
- Settlement: $250,000
- Insurer pays: $300,000 total ($250K settlement + $50K defense)
3. Duty to Defend
The insurer must defend you even against groundless, false, or fraudulent claims — as long as they're potentially covered.
What's NOT Covered Under Coverage E
Major Exclusions
| Exclusion | Reason | Alternative |
|---|---|---|
| Motor vehicle liability | Covered by auto policy | Personal Auto Policy |
| Business pursuits | Requires commercial coverage | Business Liability Policy |
| Professional services | Requires E&O coverage | Professional Liability |
| Intentional acts | Cannot insure intentional harm | N/A |
| Contractual liability | Assumed liability | Commercial Policy |
| Workers' compensation | Separate coverage required | Workers' Comp Policy |
Coverage F: Medical Payments to Others
No-fault coverage for guest injuries
Key Concept: NO-FAULT
Coverage F pays regardless of who is at fault. The injured party doesn't need to sue or prove negligence.
Standard Limits
| Common Limits | Purpose |
|---|---|
| $1,000 | Minimum |
| $2,500 | Standard |
| $5,000 | Enhanced |
Note: These limits are per person, not per occurrence.
Who Is Covered
| Covered | Not Covered |
|---|---|
| Guests on your property | You or family members |
| Persons away from premises injured by you | Tenants (requires separate coverage) |
| Persons injured by your activities | Business customers |
Purpose of Coverage F
- Pays for minor injuries promptly
- Prevents lawsuits by satisfying injured parties quickly
- Builds goodwill with neighbors and guests
- Covers expenses like ER visits, X-rays, minor treatments
Example Scenarios
| Scenario | Coverage F? | Coverage E? |
|---|---|---|
| Guest trips on your porch, $2,000 medical bill | YES | Only if they sue |
| Neighbor's child falls from your swing, minor injury | YES | Only if they sue |
| Your child injures another at school | YES | Only if they sue |
| Family member injured at home | NO | NO |
Coverage E vs. Coverage F Comparison
| Feature | Coverage E (Liability) | Coverage F (Medical) |
|---|---|---|
| Fault required | YES — must be legally liable | NO — no-fault |
| Typical limit | $100,000-$500,000 | $1,000-$5,000 |
| Covers family | NO | NO |
| Covers guests | YES (if at fault) | YES (regardless of fault) |
| Defense costs | Included + unlimited | N/A |
| Purpose | Major lawsuits | Minor injuries |
Real-World Application
Scenario: Guest Injured at Barbecue
Your guest slips on your wet deck and breaks their arm. Medical bills total $8,000.
Step 1: Coverage F pays first $5,000 (if that's the limit) Step 2: Guest might not sue (satisfied with payment) If guest sues: Coverage E would pay remaining damages + defense
Why Both Coverages Matter
- Coverage F: Quick payment, prevents lawsuits
- Coverage E: Protection when you're legally liable for serious claims
A guest slips on an icy sidewalk at your home and is injured. You are not at fault. Which coverage would pay the guest's medical bills?
Defense costs under Coverage E (Personal Liability) are:
Coverage E (Personal Liability) provides protection:
4.5 Homeowners Exclusions
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