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

Section II of the Homeowners Policy

The ISO Homeowners forms (HO 00 03 - the special form - is the exam workhorse, current edition HO 00 03 05 11) split into two halves. Section I covers property (Coverages A-D). Section II covers personal liability, and it is identical across HO-2, HO-3, HO-5, and HO-8. Section II contains two coverages you must master cold for the national exam:

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

Unlike Section I (named-peril or open-peril depending on form), Section II is the same regardless of which HO form you sell. Memorize the letters: E = liability, F = medical payments. Examiners love to swap them.

Coverage E - Personal Liability

Coverage E pays on behalf of an insured for damages the insured becomes legally liable to pay because of bodily injury (BI) or property damage (PD) caused by an occurrence to which the coverage applies. An occurrence is an accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in BI or PD.

Coverage E provides two things:

1. Indemnity - pays damages the insured is legally obligated to pay (up to the limit).
2. Defense - the insurer pays defense costs in addition to the limit of liability, even if the suit is groundless, false, or fraudulent. Defense ends when the company has paid the limit in settlement or judgment.

The default Coverage E limit is $100,000 per occurrence; it can be raised (commonly $300,000 or $500,000). The limit is per occurrence, not per claimant - one $100,000 limit is shared by everyone injured in a single occurrence.

Coverage F - Medical Payments to Others

Coverage F pays necessary medical expenses incurred or medically ascertained within three years from the date of an accident causing BI. It is a goodwill / no-fault coverage - it pays regardless of whether the insured was negligent. The default limit is $1,000 per person, and it is a per-person limit (not per occurrence).

Critical exam trap: Coverage F does NOT apply to the insured or regular residents of the household (except residence employees). It is medical payments to others - guests and members of the public, not the family. Compare this to Coverage E, which also excludes BI/PD to an insured.

Medical payments apply to a person on the insured location with permission, or off the insured location if the injury arises from the insured's premises, activities, a residence employee's work, or is caused by an animal owned by the insured.

Note that Coverage F is excess of no other coverage - it simply pays small medical bills quickly to discourage lawsuits. It is not contingent on the injured party proving negligence, which is exactly what separates it from Coverage E. If a guest's injury is severe and they sue, the matter shifts to Coverage E, where fault must be established and defense is provided.

Section II Exclusions to Memorize

Section II excludes liability and medical payments for several recurring exam scenarios. Coverages E and F do not apply to:

• Intentional acts - BI or PD expected or intended by an insured.
• Business activities and professional services rendered.
• Motor vehicles, aircraft, and most watercraft (auto/boat exposures need their own policies; small craft and certain low-horsepower outboards are carved back in).
• Communicable disease transmission and controlled-substance offenses.
• Workers' compensation obligations and care of a residence employee covered by WC.
• Liability assumed under most contracts (some written contracts are excepted).

Section II Additional Coverages

Beyond E and F, Section II provides Additional Coverages that pay in addition to the limits:

• Claim Expenses - defense costs, premiums on appeal/bail bonds (up to $250), and loss of earnings up to $250 per day for time off at the insurer's request.
• First Aid Expenses - first-aid to others at the time of an occurrence (not to an insured).
• Damage to Property of Others - pays up to $1,000 per occurrence, regardless of fault, for PD caused by an insured (a goodwill coverage; excludes intentional acts by insureds over 13, and property owned by an insured).

Coverage E vs. Coverage F at a Glance

Watch the small dollar amount: medical payments default to $1,000, an easy distractor against $5,000 (the Personal Auto Part B figure). Also distinguish the goodwill Damage to Property of Others $1,000 coverage from Coverage F - the first pays for property the insured damages, the second pays others' medical bills.