5.1 Section II Coverages E (Liability) and F (Medical Payments)
Key Takeaways
- Section II contains only Coverage E - Personal Liability (legally liable, per-occurrence, duty to defend) and Coverage F - Medical Payments to Others (no-fault, per-person).
- Coverage E applies once per occurrence regardless of the number of claimants; defense costs are paid in addition to the limit.
- Coverage F pays necessary medical expenses within three years and applies to others only - never the insured or regular household residents.
- Both coverages exclude expected/intended acts, business pursuits, most motor vehicles/aircraft/watercraft, and workers' compensation.
- Standard offered limits: Coverage E $100,000 (up to $500,000); Coverage F $1,000 to $5,000 per person.
Section II: The Liability Half of the Homeowners Policy
Every ISO Homeowners form (HO 00 03, HO 00 05, HO 00 04, HO 00 06, current 2011 and later editions) is divided into two halves. Section I covers the insured's own property (Coverages A-D). Section II is the liability half, and it contains exactly two insuring agreements: Coverage E - Personal Liability and Coverage F - Medical Payments to Others. On the national exam, expect roughly one-quarter of homeowners questions to test Section II, because it operates on a completely different logic than property coverage: it responds to claims brought by third parties, not to damage to the insured's own things.
The critical mental model: Section I asks "was the insured's property damaged by a covered peril?" Section II asks "is the insured legally responsible, or did someone get hurt on the premises?"
Coverage E - Personal Liability
Coverage E pays, on behalf of an insured, damages the insured becomes legally liable to pay because of bodily injury (BI) or property damage (PD) caused by an occurrence. 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. Two duties flow from this:
- Duty to pay damages the insured is legally obligated to pay (up to the limit).
- Duty to defend - the insurer provides and pays for a legal defense, 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 when the insurer has paid out the limit in settlement of a claim.
Note the word legally. Coverage E is fault-based liability insurance - the insured must be legally responsible. A neighbor merely being injured is not enough; negligence (or another basis of legal liability) must exist.
Coverage E applies on a per-occurrence basis, not per claim and not per person. The standard minimum offered limit is $100,000, with $300,000 and $500,000 commonly written. Because liability is on a single combined limit per occurrence, one accident injuring four people shares the single Coverage E limit - there is no separate per-person sublimit the way auto split limits work.
Worked example: A guest slips on the insured's icy walkway and a contractor is also injured by the same fall of ice. Both sue. With Coverage E at $300,000, the most the insurer pays for that single occurrence is $300,000 total, allocated across both claimants by the court or settlement - not $300,000 each. If judgments total $420,000, the insured personally owes the $120,000 excess.
Coverage F - Medical Payments to Others
Coverage F is fundamentally different from Coverage E: it is no-fault and goodwill coverage. It pays the necessary medical expenses incurred or medically ascertained within three years from the date of an accident causing bodily injury, regardless of whether the insured was at fault. Its purpose is to settle small medical bills quickly and discourage lawsuits.
Coverage F is a per-person limit (commonly $1,000 to $5,000), and it applies to others - never to the insured or regular residents of the household. That is the single most-tested trap. If the insured's own child is hurt, Coverage F does not respond; if a visiting friend's child is hurt, it does.
Coverage F covers a person who is:
| Who | On insured premises | Off insured premises |
|---|---|---|
| Guest / visitor | Covered (with permission) | Covered if injury arises out of insured's activities, an insured's animal, or a residence employee in the course of employment |
| Residence employee | Covered | Covered if injury arises out of and in the course of employment |
| The insured / household residents | NOT covered | NOT covered |
| A tenant of the insured | NOT covered (excluded) | NOT covered |
Coverage F has no defense obligation and no "legally liable" requirement - the insurer simply pays reasonable medical bills up to the per-person limit.
Worked example: A neighbor's child is bitten by the insured's dog while playing in the yard with permission. Coverage F is $5,000 per person. The medical bills total $3,200. Coverage F pays the $3,200 immediately on a no-fault basis. Separately, if the parents later sue for $50,000 alleging negligence, that lawsuit is handled under Coverage E (legally liable, with the duty to defend) - the two coverages can both respond to the same incident.
Section II Exclusions You Must Know
Both Coverage E and F exclude bodily injury or property damage that is:
- Expected or intended by the insured (intentional acts are not occurrences).
- Arising out of business or professional services (a separate business pursuits / incidental occupancy endorsement is needed).
- Arising out of ownership or operation of most motor vehicles, aircraft, and watercraft (covered instead by auto/aircraft/boat policies, with narrow exceptions for small craft and recreational vehicles on the insured location).
- Workers' compensation obligations.
- Transmission of a communicable disease by an insured.
Property damage to property owned by or rented to the insured, and to property in the insured's care, custody, or control, is also excluded under Coverage E - Section II does not pay for damage to your own stuff (that is Section I's job).
A guest and a delivery driver are both injured by the same falling tree limb during a backyard party at the insured's home. Coverage E is written at $300,000 per occurrence. Court awards total $360,000. How much does the homeowners policy pay under Coverage E?
Which statement about Coverage F - Medical Payments to Others is correct?