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

Section II of the Homeowners Policy

Section II of the ISO Homeowners program (HO 00 03 — the current edition is HO 00 03 05 11) provides liability protection, in contrast to Section I, which insures the dwelling, other structures, personal property, and loss of use. Section II contains two coverages:

• Coverage E — Personal Liability
• Coverage F — Medical Payments to Others

Both coverages respond to bodily injury (BI) and, for Coverage E, property damage (PD) arising out of an occurrence, defined as an accident — including continuous or repeated exposure to substantially the same general harmful conditions — that results in BI or PD during the policy period. The key exam distinction: Coverage E is liability-based (the insured must be legally responsible), while Coverage F is no-fault (it pays regardless of who was at fault).

Coverage E — Personal Liability

Coverage E pays, up to the limit of liability, damages an insured becomes legally liable to pay because of BI or PD caused by an occurrence to which the coverage applies. It also provides a critical defense duty: the insurer pays defense costs (attorney fees, court costs) in addition to the policy limit, even if the suit is groundless, false, or fraudulent. The insurer's duty to defend ends when the amount paid for damages exhausts the limit of liability.

The base Coverage E limit is $100,000 per occurrence, though most insureds raise it to $300,000 or $500,000. Note this is a single limit per occurrence, not a split limit — all BI and PD claims from one occurrence share the one limit. Personal injury (libel, slander, false arrest) is not covered unless added by the Personal Injury endorsement (HO 24 82).

Coverage F — Medical Payments to Others

Coverage F pays reasonable medical expenses incurred within three years of an accident causing BI. It is a goodwill, no-fault coverage: the injured party need not prove the insured was negligent. The base limit is $1,000 per person, commonly raised to $5,000.

Coverage F applies to persons other than an insured, in two situations: (1) injury to a person on the insured location with the insured's permission, and (2) injury to a person off the insured location if the injury arises out of a condition on the insured location, is caused by the activities of an insured, is caused by a residence employee in the course of employment, or is caused by an animal owned by or in the care of an insured. Coverage F expressly does not pay for injuries to a residence employee if the injury occurs off the insured location and does not arise out of employment.

Worked Limit Example

A guest is injured at the insured's home. The insured carries Coverage E $300,000 and Coverage F $5,000. The guest's first-week medical bills are $4,200, paid promptly under Coverage F with no fault determination. The guest later sues, alleging the insured negligently left a hazard, and is awarded $250,000 plus the insurer incurs $40,000 in defense costs.

Trap: Coverage F amounts are not deducted from Coverage E. They are separate coverages with separate limits. Defense costs do not erode the Coverage E limit until the limit is paid out in damages.

What Coverage E Pays and the Major Exclusions

Coverage E (Personal Liability) pays sums the insured becomes legally obligated to pay as damages for bodily injury or property damage caused by an occurrence, and it provides a defense — defense costs are paid in addition to the limit and end when the limit is exhausted by payment of a judgment or settlement. The limit applies per occurrence, not per claimant, so multiple injured parties share the single limit.

The big exclusions the exam tests are business pursuits, professional services, motor vehicles and most watercraft, aircraft, intentional injury, workers compensation obligations, and liability assumed under contract (with exceptions), plus injury to an insured (no coverage for family-versus-family claims).

Coverage F, Medical Payments, and a Limit Walkthrough

Coverage F (Medical Payments to Others) pays reasonable medical expenses, regardless of fault, for bodily injury to a non-insured on the insured location or caused by the insured's activities, an animal, or a residence employee — typically within three years of the accident. It does not apply to the insured or regular residents (other than a residence employee). Because it is no-fault and small (commonly $1,000 to $5,000 per person), it settles minor guest injuries without litigation and can pay even when Coverage E would not, because liability need not be established.

The exam contrasts the two: Coverage E requires legal liability and defends the insured; Coverage F pays goodwill medical costs without proving fault.

Additional Coverages Under Section II

Section II grants several additional coverages that pay in addition to the E and F limits. Claim expenses include the cost of defense, bonds, and loss of earnings up to a stated daily amount for attending trial. First-aid expenses to others are paid at the time of an accident. Damage to property of others pays a small no-fault amount (commonly $1,000 per occurrence) for property the insured damages even without legal liability — useful for goodwill, though it excludes property owned by an insured and intentional damage by an insured age 13 or older.

Loss assessment covers an insured's share of an assessment charged by a homeowners or condo association for a covered liability loss.