5.1 Section II Coverages E (Liability) and F (Medical Payments)
Key Takeaways
- Coverage E (Personal Liability) pays sums an insured is legally liable to pay for bodily injury or property damage caused by an occurrence, and it provides a legal defense worldwide
- Defense costs and other supplementary payments under Coverage E are paid IN ADDITION to the limit, so a $300,000 limit is not reduced by the cost of defending the suit
- Coverage F (Medical Payments to Others) is NO-FAULT and pays a non-insured's reasonable medical expenses incurred within three years of the accident, regardless of the insured's negligence
- Coverage F never pays the named insured or regular household residents; Coverage E never pays an insured for injury to a fellow insured ('insured-versus-insured')
- Common starting limits are $100,000 per occurrence for Coverage E and $1,000 per person for Coverage F; an umbrella policy stacks excess liability above the homeowners limit
Section II: Third-Party Coverage
Where Section I of the homeowners policy protects the insured's own property (first-party coverage), Section II protects the insured when someone else claims the insured hurt them or damaged their property (third-party coverage). The standard form is the ISO (Insurance Services Office) HO-3 2022 edition (HO 00 03), though all homeowners forms share the same Section II.
Two coverages do the work: Coverage E - Personal Liability and Coverage F - Medical Payments to Others.
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, and it supplies a legal defense. An occurrence is defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions, that results in BI or PD during the policy period.
| Loss type | Example |
|---|---|
| Bodily Injury (BI) | The family dog bites a delivery driver; a guest fractures a wrist on the steps |
| Property Damage (PD) | The insured's tree falls on a neighbor's parked car |
Because the trigger is an accident, intentional injury by an insured is excluded - the law will not let you insure deliberate harm.
Typical Coverage E Limits
Limits apply per occurrence, not per claimant. The exam expects you to recognize the standard tier:
| Per-occurrence limit | Who selects it |
|---|---|
| $100,000 | Common policy minimum |
| $300,000 | Recommended for most families |
| $500,000 | Higher-asset households |
| $1,000,000+ | Usually via a separate umbrella policy stacked above the HO limit |
An umbrella policy sits above Coverage E. If the homeowners limit is $300,000 and a judgment is $750,000, the HO pays $300,000 and the umbrella pays the remaining $450,000 (subject to its own limit), but only after the underlying limit is exhausted.
Three Coverage E Features the Exam Loves
1. Worldwide coverage. Coverage E follows the insured anywhere on Earth - a tort committed on vacation abroad triggers coverage exactly as if it happened at home.
2. Defense and supplementary payments are extra to the limit. Defense costs do not erode the limit. With a $300,000 limit, a $250,000 settlement plus $40,000 in defense costs still leaves the full limit available for the loss. Supplementary payments also include premiums on bonds, post-judgment interest, and the insured's lost earnings (up to a stated daily amount, commonly $250/day) to attend trial.
3. Duty to defend even groundless suits. The insurer must defend any suit seeking potentially covered damages, even if the claim is false, groundless, or fraudulent. That duty ends only when the insurer has paid the applicable limit in judgments or settlements.
Coverage F - Medical Payments to Others
Coverage F is a no-fault, goodwill coverage. It pays the reasonable medical expenses of a person who is not an insured and who is injured, regardless of whether the insured was negligent, provided the expense is incurred within three years of the accident.
| Common per-person limit | Tier |
|---|---|
| $1,000 | Standard minimum |
| $2,500 | Common upgrade |
| $5,000 | Enhanced |
Limits are per person, not per occurrence. The purpose is to pay a guest's small medical bill quickly so the injured party never feels the need to sue.
Who Coverage F Does and Does Not Pay
| Coverage F PAYS | Coverage F does NOT pay |
|---|---|
| A guest injured on the residence premises | The named insured or family members |
| A person injured by an insured's activities away from home | A regular resident of the household (except a residence employee) |
| A residence employee injured in the course of work | A tenant or a business customer |
Key concept: Coverage F never pays the insured's own household. For your family's injuries you look to health insurance, not the homeowners policy.
Major Section II Exclusions
| Exclusion | Why excluded | Correct source of coverage |
|---|---|---|
| Motor vehicles (off premises) | Auto exposure | Personal Auto Policy |
| Business pursuits | Commercial exposure | CGL (Commercial General Liability) / BOP |
| Professional services | Errors exposure | E&O (Errors and Omissions) / Professional Liability |
| Intentional injury | Cannot insure deliberate harm | None |
| Workers' compensation obligations | Statutory benefit | Workers' Compensation policy |
A Worked Scenario Tying E and F Together
A guest slips on a wet deck at a barbecue and runs up $8,000 in medical bills. Coverage F pays the first dollars up to its limit (say $5,000) immediately, no fault required. If the guest then sues for the remaining $3,000 plus pain and suffering and the insured is found legally liable, Coverage E pays the balance plus the defense costs. Together they handle the fast minor claim and the slow lawsuit.
Homeowners Liability (E) and Medical Payments (F)
Homeowners Section II provides personal liability protection. Coverage E – Personal Liability pays sums the insured is legally liable for due to bodily injury or property damage to others, and includes the duty to defend. Coverage F – Medical Payments to Others pays reasonable medical expenses, regardless of fault, for non-residents injured on the insured premises or by the insured's activities (commonly $1,000-$5,000 per person).
| Feature | Coverage E (Liability) | Coverage F (Med Pay) |
|---|---|---|
| Fault required? | Yes — legal liability | No |
| Who is covered | Third parties (BI/PD) | Injured non-residents/guests |
| Defense | Insurer defends | N/A |
| Excludes | The insured's own injuries | Residents/regular household members |
Coverage F never pays the insured or regular residents — only others. Both coverages exclude business pursuits, professional services, intentional injury, motor-vehicle/aircraft/large-watercraft liability (steered to PAP/aviation/marine), and damage to property in the insured's care.
Worked Coverage F scenario: A dinner guest slips on the insured's icy steps and incurs $1,800 in medical bills. Coverage F pays the $1,800 (within its limit) without any finding that the homeowner was negligent — fast goodwill coverage. If the guest later sues claiming negligence and wins $40,000, Coverage E responds to the judgment and defense, and any Coverage F already paid is typically credited.
Exclusion trap: A homeowner runs a daycare from the home. An injured child's claim is excluded as a business pursuit unless a Permitted Incidental Occupancies or daycare endorsement was added — a recurring exam point.
A guest slips on an icy walkway at the insured's home and is injured, even though the insured took reasonable care and was not negligent. Which coverage pays the guest's medical bills?
Defense costs an insurer incurs under Coverage E are treated how relative to the policy limit?