5.1 Section II Coverages E (Liability) and F (Medical Payments)
Key Takeaways
- Section II is third-party (liability); Coverage E pays sums the insured is legally liable for, plus defense in addition to the limit.
- Coverage F (Medical Payments to Others) pays a non-insured's medical bills within 3 years on a no-fault basis; default $1,000, often raised to $5,000.
- Coverage E uses a single limit per occurrence (commonly $100,000), not auto-style split limits like 100/300/50.
- Defense costs are outside the limit; the duty to defend ends when the insurer pays the applicable limit.
- Coverage F payments may be deducted from a later Coverage E settlement to the same person to prevent double recovery.
Section II of the ISO Homeowners policy (HO 00 03 — the HO-3 special form is the market standard, current ISO edition HO 00 03 05 11) is the liability half of the contract. Where Section I (Coverages A–D) pays the insured's own property losses on a first-party basis, Section II responds to third-party claims: someone else is hurt or their property is damaged, and they look to the insured to pay. 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 to which the coverage applies. The insuring agreement adds a second, enormously valuable promise: the insurer will provide a defense at its own expense, even if the suit is groundless, false, or fraudulent. Defense costs are paid in addition to the limit of liability, and the duty to defend ends only when the insurer has paid the applicable limit in settlement or judgment.
An occurrence is 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 word "accident" is the trigger — intentional acts are excluded.
Coverage F — Medical Payments to Others
Coverage F pays necessary medical expenses incurred within three years of an accident causing BI to a person other than an insured. The defining feature is that it pays on a no-fault basis — the injured person does not have to prove the insured was negligent. It is a goodwill coverage designed to settle minor injuries quickly and discourage lawsuits.
Coverage F applies to a person on the insured location with the insured's permission, or off the insured location if the injury arises from a condition on the location, is caused by the insured's activities or a residence employee in the course of employment, or is caused by an animal owned by an insured. It does not pay for injuries to the insured or regular residents of the household (other than residence employees).
| Feature | Coverage E (Personal Liability) | Coverage F (Medical Payments) |
|---|---|---|
| Trigger | Legal liability for BI/PD | BI to others — no fault needed |
| Covers the insured? | No (third parties only) | No (others only) |
| Defense provided? | Yes, in addition to limit | No |
| Typical limit | $100,000–$500,000 per occurrence | $1,000–$5,000 per person |
| Time limit | Policy period occurrence | Expenses within 3 years |
Limits, sublimits, and a worked split-limit example
Coverage E is written as a single limit per occurrence — commonly $100,000, with $300,000 and $500,000 widely sold and personal umbrella policies requiring a $300,000 or $500,000 underlying limit. Coverage F defaults to $1,000 per person and is frequently raised to $5,000.
Unlike auto liability (which uses split limits such as 100/300/50 — $100,000 per person BI, $300,000 per occurrence BI, $50,000 PD), homeowners Coverage E uses one combined single limit that applies to all BI and PD from a single occurrence. Watch this distinction on the exam.
Worked example. A dinner guest is injured at the insured's home. The HO-3 carries Coverage E $100,000 and Coverage F $5,000. The insurer pays $1,800 in Coverage F medical bills with no proof of fault. The guest later sues and wins a $130,000 judgment for which the insured is legally liable. Coverage E pays its $100,000 limit; the insured owes the remaining $30,000 out of pocket (an umbrella would have picked this up). Any Coverage F payment may be deducted from a later Coverage E settlement to the same person, preventing double recovery.
Trap: Coverage F is not liability insurance and pays regardless of fault; Coverage E requires legal liability. Watch questions stressing "the insured was not negligent."
Coverage E vs. Coverage F at a Glance
| Feature | Coverage E — Personal Liability | Coverage F — Medical Payments |
|---|---|---|
| Trigger | Insured is legally liable for BI/PD | Injury to others, no liability needed |
| Fault | Required | Not required (goodwill coverage) |
| Covers the insured/family? | Defends the insured | Excludes the insured and regular residents |
| Default limit | $100,000 per occurrence | $1,000 per person |
| Defense costs | Paid in addition to the limit | N/A |
Who Is an Insured for Section II
The liability section extends to the named insured, resident spouse, resident relatives, and others under 21 in their care. It follows insureds off the premises — a guest injured by the insured's dog at a park is covered. Key built-in exclusions to memorize: business and professional activities, motor vehicles (covered by the auto policy), watercraft above stated horsepower/length thresholds, aircraft, and intentional injury caused by an insured.
Medical Payments does not apply to a tenant of the insured or to anyone eligible for workers compensation, and it excludes injury arising from a business on the residence premises.
A guest slips on the insured's icy walkway and is injured, but the insured was not negligent. Under the HO-3, which coverage pays the guest's reasonable medical bills?
An insured's HO-3 has Coverage E of $100,000. A visitor wins a $140,000 judgment plus the insurer incurs $20,000 in defense costs. How much does the insured pay out of pocket?