5.1 Section II Coverages E (Liability) and F (Medical Payments)

Section II of the Homeowners Policy

The ISO Homeowners program (current edition HO 00 03 05 11 for the special form, plus HO-2, HO-4, HO-5, HO-6, and HO-8) splits the contract into two halves. Section I covers property (Coverages A-D). Section II covers liability and is identical in every HO form. It contains two insuring agreements: Coverage E - Personal Liability and Coverage F - Medical Payments to Others. Knowing which one pays, and to whom, is one of the most heavily tested distinctions on the national exam.

Section II protects the named insured, resident spouse, resident relatives, and any other person under 21 in their care. It follows the insured worldwide for personal (non-business) acts.

Coverage E - Personal Liability

Coverage E pays sums the insured becomes legally liable to pay because of bodily injury (BI) or property damage (PD) caused by an occurrence - defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions. It is a liability coverage, so fault must be established.

Coverage E provides two distinct things:

• Indemnity - pays the damages the insured legally owes a third party, up to the limit (commonly $100,000, raisable to $300,000 or $500,000).
• Defense - the insurer defends the insured, hires counsel, and pays defense costs in addition to the limit. Defense ends once the limit is exhausted by payment of a judgment or settlement.

Key trigger: liability must arise from BI or PD to others. Damage to the insured's own property is never a Coverage E loss.

Coverage F - Medical Payments to Others

Coverage F is a goodwill, no-fault coverage. It pays reasonable medical expenses incurred within three years of an accident, regardless of whether the insured was negligent. Typical limit is $1,000 per person, raisable to $5,000.

Who is covered? Only persons other than insureds. It applies to a person:

• on the insured location with the insured's permission, or
• off the insured location if injury arises out of a condition on the location, the insured's activities, a residence employee's work, or an animal owned by/in the care of an insured.

Trap: Coverage F never pays for injury to the named insured, resident relatives, or regular residents of the household (except a residence employee). Mixing this up with Coverage E is a classic exam error.

Coverage E vs. Coverage F at a Glance

Section II Exclusions to Remember

Section II contains exclusions that frequently appear on the exam. Coverage E and F do not apply to:

• Intentional acts - injury or damage the insured expected or intended.
• Business pursuits - liability arising from a trade or profession (a separate endorsement or commercial policy is needed).
• Motor vehicles, aircraft, and most watercraft - covered under auto/watercraft policies, with narrow exceptions for small craft and recreational vehicles on the insured premises.
• Workers compensation obligations and most professional services.
• Contractual liability assumed beyond the insured's own legal duty.

These exclusions push the loss to the correct policy (PAP, CGL, workers comp) rather than the homeowners form.

Additional Coverages Under Section II

Beyond the two insuring agreements, Section II provides supplementary payments that do not reduce the Coverage E or F limits:

• Claim expenses - defense costs, court costs, and premiums on bonds required in a suit.
• First aid expenses - first aid to others at the time of an accident (but not to an insured).
• Damage to property of others - pays up to $1,000 per occurrence on a no-fault basis for property of others damaged by an insured, regardless of legal liability. This is a goodwill provision similar in spirit to Coverage F but for property rather than bodily injury. It excludes property owned by an insured and intentional damage by an insured over age 13.

Worked Example - Which Coverage Pays?

A neighbor slips on the insured's icy walkway, breaks a wrist, and incurs $4,200 in ER and follow-up bills. The neighbor does not sue.

• Coverage F can pay the $4,200 immediately as no-fault medical, but only up to the $1,000 base limit unless the insured bought a higher Med Pay limit. Net Coverage F payment at base limit = $1,000.
• If the neighbor later sues and proves negligence, Coverage E responds for the full damages (medical, pain and suffering) up to the $100,000 limit, plus defense costs paid separately.

Note Coverage F payments do not reduce the Coverage E limit; they are independent insuring agreements. If the insured carries a higher Med Pay limit of $5,000, Coverage F pays the full $4,200 and the neighbor may never need to sue - illustrating why Coverage F functions as a goodwill, lawsuit-avoiding coverage.