4.5 Section II — Personal Liability and Medical Payments

Coverage E — Personal Liability

When a claim or suit is brought against an insured for bodily injury (BI) or property damage (PD) caused by an occurrence (an accident, including continuous exposure, resulting in BI/PD) to which coverage applies, Coverage E does two things:

1. Pays damages for which an insured is legally liable, up to the policy limit.
2. Provides a legal defense with counsel of the insurer's choice, at the insurer's expense.

Defense costs are paid in addition to the limit — a key exam point. The insurer's duty to defend ends when it has paid the limit in settlement or judgment for the occurrence. The default Coverage E limit is $100,000, but most consumers buy $300,000–$500,000 and add a personal umbrella for catastrophic exposures (a frequent funnel from personal lines into umbrella questions).

Coverage F — Medical Payments to Others

Coverage F pays necessary medical expenses incurred within 3 years of an accident causing BI to a person other than an insured, on a no-fault basis (no need to prove the insured was negligent). It applies to a non-insured who is injured:

• On the insured location with the insured's permission, OR
• Away from the insured location, if the BI arises from a condition on the insured location or adjoining ways, the activities of an insured, a residence employee in the course of employment, or an animal owned by or in the care of an insured.

Limits typically run $1,000–$5,000 per person. Coverage F does NOT pay the medical bills of the named insured or regular residents of the household — it is purely a goodwill coverage for guests and third parties.

What Counts as an "Insured Location"

An occasional rental (renting the home for a weekend) does not void Section II, but persistent business rental does — a landlord policy is then required.

Section II Exclusions

• Intentional injury expected or intended by an insured
• Business pursuits (a narrow incidental/part-time exception applies)
• Professional services (medical, legal, engineering, accounting)
• Motor vehicles owned/operated/loaded by an insured — with exceptions for vehicles in dead storage on the insured location, vehicles used to service the residence (riding mower), golf carts on a golf course, and recreational/sub-horsepower vehicles not subject to registration
• Watercraft that are large or fast (small unmotorized canoes/rowboats and craft under the stated horsepower/length limits are covered)
• Aircraft and hovercraft owned/operated by an insured
• Workers' compensation — BI to a person eligible for WC benefits
• War, nuclear, communicable disease, sexual molestation, controlled substances, and racing
• Contractual liability assumed under contract (limited personal-injury exception)

Additional Section II Coverages

• Claim expenses — court costs, interest on judgments, and the premium on required bonds
• First-aid expenses — paid at the scene for injured non-insureds, not for an insured
• Damage to Property of Others — up to $1,000 per occurrence, paid regardless of fault for property damaged by an insured; excludes property damaged intentionally by an insured age 13 or older, business property, and the insured's own property
• Loss Assessment — a small limit (often $1,000) for the insured's share of a homeowners/condo association assessment for a covered loss

Who Is an "Insured" Under Section II

The definition of insured controls who receives liability protection and whose acts trigger coverage:

• The named insured and resident spouse
• Resident relatives of the household
• Other persons under age 21 in the care of an insured
• A full-time student away at school who was a resident before leaving (under stated age limits)
• For animals/watercraft: any person/organization legally responsible for them, except those using them in business or without consent

Because a resident minor child is an insured, an injury that child causes to a guest is covered, but injury the child causes to another insured (an intra-family suit) is not — Section II excludes BI to an insured. This severability/insured-vs-insured distinction is a frequent exam target.

Occurrence vs Accident, and the Limit Structure

The trigger is an occurrence, defined to include continuous or repeated exposure to substantially the same harmful conditions — broader than a single sudden accident. The Coverage E limit applies per occurrence, not per claimant: if one accident injures three people and a $300,000 limit applies, all three claimants share that $300,000, while defense costs are paid on top. This is why agents recommend higher Coverage E plus a personal umbrella that drops down over the homeowners and auto liability.

Business and Home-Sharing Traps

The business pursuits exclusion is broad, but the form gives narrow exceptions for incidental, part-time activities of a minor (babysitting, lawn mowing) and limited home office use. Persistent short-term rental / home-sharing is treated as a business and needs a Home Business or home-sharing endorsement. On the exam, a full-time business loss at the residence is excluded unless a business endorsement or separate commercial policy is in place.