Homeowners Policy Liability Coverages and Policy Conditions
This domain tests Section II: personal liability, medical payments to others, liability exclusions, and the policy conditions that control both property and liability claims. The exam often contrasts fault-based liability with no-fault medical payments and tests whether the property deductible applies.
Coverage E and Coverage F
Coverage E pays damages because of bodily injury or property damage for which an insured is legally liable, plus defense. The limit is usually per occurrence, and standard homeowners forms generally pay defense costs in addition to the Coverage E limit. It does not pay the insured's own medical bills or damage to the insured's own property. Coverage F pays reasonable medical expenses to others on a no-fault basis, usually subject to a per-person limit such as $1,000. No lawsuit or negligence finding is required. Coverage F does not apply to an insured, and the Section I deductible does not apply.
Exclusions and conditions
Common liability exclusions include intentional injury, business pursuits, professional services, premises rented to others, motor vehicles, watercraft, aircraft, war, controlled substances, and injury reasonably expected by the insured. Some exclusions have narrow exceptions, so read the form. Conditions include duties after loss, notice, cooperation, proof of loss, appraisal, other insurance, subrogation, and legal action requirements. An occurrence includes an accident and continuous or repeated exposure to substantially the same harmful conditions.
Worked example
A neighbor's child is bitten by the insured's dog. The child needs $3,000 of medical care. The insured carries Coverage F of $1,000 and Coverage E of $300,000 with a $1,000 property deductible. Coverage F can pay up to $1,000 for the medical bills without proof of negligence and without applying the deductible. The remaining $2,000, plus any other covered damages, may be considered under Coverage E if the insured is legally liable. Defense costs are generally paid in addition to the Coverage E limit under standard homeowners forms. The property deductible still does not reduce either payment.
Traps
Do not require fault for Coverage F. Do not apply the Section I deductible to Coverage E or F. Do not assume a homeowners policy covers a car accident; the auto exclusion is broad. Do not miss the business-pursuits exclusion. Do not treat Coverage E as covering the insured's own injuries or own property. Do not assume every liability limit is per person; Coverage E is typically per occurrence.