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

Section II of the Homeowners Policy

The ISO Homeowners program (current edition HO 00 03 05 11, the special form, plus companion forms HO 00 02/04/05/06/08) splits coverage into two halves. Section I is the property side (Coverages A-Dwelling, B-Other Structures, C-Personal Property, D-Loss of Use). Section II is the liability side, made up of just two grants: Coverage E - Personal Liability and Coverage F - Medical Payments to Others. Exam questions almost always test the letter of each coverage, so memorize that E = liability and F = med pay.

Section II responds to bodily injury (BI) and property damage (PD) caused by an occurrence - 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.

Unlike Section I, which is tied to the insured location, Section II liability follows the insured's personal activities worldwide (subject to exclusions). Coverage applies whether the loss happens at home, at a vacation rental, or while the insured is traveling, which is why personal liability is one of the most valuable protections in the policy.

Coverage E - Personal Liability

Coverage E pays, up to the limit of liability, sums an insured becomes legally obligated to pay as damages because of BI or PD caused by an occurrence to which coverage applies. Critically, the insurer also provides a defense at its own expense, with counsel of its choice, even if the suit is groundless, false, or fraudulent. Defense costs are paid in addition to the Coverage E limit and do not erode it - a frequent exam trap.

The insurer's duty to defend ends when the amount it pays for damages equals the limit of liability. So once the carrier tenders the policy limit, it may walk away from the defense.

• Default ISO limit: $100,000 per occurrence (commonly raised to $300,000 or $500,000).
• Worldwide coverage for most personal (non-business) activities.
• Applies on an occurrence basis, not per person or per claim - one limit caps everyone hurt in one event.

Coverage F - Medical Payments to Others

Coverage F pays reasonable and necessary medical expenses incurred within three years of an accident causing BI. It is a no-fault, goodwill coverage: the injured party need not prove the insured was negligent. This is the key distinction from Coverage E, which requires legal liability.

Coverage F applies to a person off the insured location if BI is caused by the insured's activities, a residence employee in the course of employment, or an animal owned by or in the care of an insured. On the insured location, it covers persons there with permission of an insured.

It does NOT cover an insured or regular residents of the household (other than residence employees). Default limit: $1,000 per person.

Worked example - per-occurrence vs. per-person

A guest and two neighbors are injured when an insured's deck collapses during a party. Coverage E is written at $300,000 per occurrence; Coverage F is $5,000 per person.

Note Coverage F is capped per person ($5,000), so the $6,000 claimant is shorted $1,000; defense costs sit outside the $300,000 Coverage E limit.

Who is an insured under Section II

"Insured" is broader than just the named insured. It includes the named insured and resident relatives, other persons under 21 in the named insured's care, and - for liability arising out of certain property - the named insured. A residence employee is covered while performing duties. The same definition controls who is barred from Coverage F med pay, since insureds cannot collect their own med pay.

Also know the additional coverages under Section II, paid in addition to the limits: Claim Expenses (defense, bonds up to $1,000, post-judgment interest, up to $250/day for loss of earnings to attend trial); First Aid Expenses to others; Damage to Property of Others - up to $1,000 per occurrence for PD an insured causes regardless of fault (a no-fault goodwill grant separate from E); and Loss Assessment for condo/association charges.

Section II exclusions to know

Both E and F exclude BI/PD that is expected or intended by an insured, arises from business pursuits or professional services, comes from rental of the premises (with exceptions for occasional rental and certain rooms), or stems from ownership/operation of motor vehicles, watercraft, and aircraft (with low-power/small-craft exceptions). Coverage F additionally excludes injury to any insured, to residence employees off premises and outside employment, and to anyone entitled to workers compensation benefits.

Exam traps:

• Intentional acts are excluded under E and F - even if the result was unintended, an intended act is barred.
• A dog bite to a guest is covered (E if sued, F regardless of fault); a bite to the insured's own child is not covered under F.
• Damage to Property of Others ($1,000) intentionally fills a gap: when an insured (often a child age 13 or over, or any age under) damages a neighbor's property by accident, the insurer pays up to $1,000 even though Coverage E would require legal liability and excludes PD to property in the insured's care.