Homeowners Policy: Liability Coverages and Conditions
This domain covers Section II of the homeowners policy: personal liability and medical payments to others. The exam tests the trigger for liability, the no-fault medical payments coverage, key exclusions, and the insured's duties after an occurrence.
Coverage E - personal liability
- Pays damages because of bodily injury or property damage for which the insured is legally liable, up to the limit.
- Defense costs and claim expenses are paid in addition to the liability limit.
- Coverage applies to insureds, resident relatives, and, in limited situations, persons using the insured's property with permission.
Coverage F - medical payments to others
- Pays reasonable medical expenses on a no-fault basis for guests and others injured on the premises or by the insured's activities.
- Does not pay insureds or regular residents; it is not a liability coverage and does not pay pain and suffering.
- Payments are subject to a per-person limit and usually must be incurred within three years of the accident.
Exclusions and conditions
- Excludes intentional or expected injury, business and professional activities, motor vehicles, watercraft, aircraft, and workers' compensation injuries.
- The insured must give notice, cooperate, avoid voluntary payments, and forward legal papers. The insurer may defend or settle.
Worked example
A neighbor trips on a cracked walkway and breaks a wrist. Coverage F can pay the medical bills regardless of fault, up to the per-person limit. If the neighbor sues for pain and suffering, Coverage E responds only if the insured is legally liable; the insurer then defends and pays damages up to the limit, with defense costs outside the limit.
Traps
Do not use medical payments to pay the insured's own bills. Do not assume every injury on the property creates liability. Do not overlook the business, auto, and intentional-injury exclusions.