HOMEOWNERS POLICIES · 6 MIN READ
Section II Liability, Med Pay, and Goodwill Coverages
Section II turns the homeowners policy into a personal liability contract. Coverage E (Personal Liability) pays damages the insured is legally obligated to pay for bodily injury or property damage arising from the premises or personal activities, and it funds the insurer's duty to defend on top of the limit. Coverage F (Medical Payments to Others) is different in kind: it is a no-fault goodwill coverage paying reasonable medical expenses — standard default $1,000 per person — for NON-residents injured on the premises or by an insured's activities, without any showing of legal liability. ISO HO 04 14 raises the per-person Coverage F limit (commonly $2,000, $5,000, or $10,000), and ISO HO 04 33 increases the Coverage E limit. Section II also carries its own additional coverage: Damage to Property of Others pays up to $1,000 per occurrence, at replacement cost, for property of others damaged by an insured — again without regard to legal liability, so a child who breaks a neighbor's window is handled without litigation. Who counts as an insured matters constantly: the named insured, resident relatives, residents under 21 in an insured's care, and (under most ISO forms) full-time students under 24 living away from home who remain residents. ISO HO 04 48 extends insured status to named NON-relative household members, such as a domestic partner, who would not otherwise qualify. The major Section II exclusions define the endorsement market. Business pursuits are excluded (with a narrow exception), motor vehicles are excluded, and watercraft are excluded above small-craft thresholds: owned sailing vessels 26 feet or more, outboard engines over 25 horsepower owned by the insured, and inboard or inboard-outdrive craft (over 50 horsepower thresholds apply in the endorsement structure). Endorsements HO 24 06 and the HO 24 70-series Personal Watercraft endorsements buy back liability and medical payments for scheduled craft — liability only, never hull coverage. HO 24 82 adds Personal Injury coverage (libel, slander, false arrest, invasion of privacy), which the base form does not include.
Key rules
Coverage E requires legal liability; Coverage F and Damage to Property of Others do not
Coverage E indemnifies and defends against claims for damages. Coverage F ($1,000 per person default) and Damage to Property of Others ($1,000 per occurrence at replacement cost) pay as goodwill without fault.
Why the exam cares: Distinguishing fault-based from no-fault Section II payments is the most tested liability concept in the homeowners program.
Coverage F applies only to non-residents, never to the insured or household members
Medical payments cover guests and others injured on the premises or by the insured's activities; residents of the household look to health insurance, not Coverage F.
Why the exam cares: A distractor always offers med-pay for the named insured's own injury — recognizing the non-resident restriction eliminates it.
Resident relatives are insureds automatically; HO 04 48 covers non-relatives
The definition of insured includes resident relatives, residents under 21 in an insured's care, and full-time students under 24 away at school. HO 04 48 adds named non-relative household members like a domestic partner.
Why the exam cares: The exam tests whether a returning adult child needs an endorsement (no) versus an unrelated roommate or partner (yes, HO 04 48).
Watercraft liability is excluded above small-craft thresholds; endorsements buy it back
Excluded: owned sailing vessels 26 feet or more, owned outboards over 25 HP, and inboard/inboard-outdrive craft above the form's horsepower gates. HO 24 06 and HO 24 70-series schedule specific craft for Coverage E and F only.
Why the exam cares: Questions test both the exclusion thresholds and that the buy-back is liability only — hull damage needs a boatowners or marine policy.
Business pursuits are excluded; HO 24 82 adds personal injury offenses
Section II excludes liability from business pursuits, with only a narrow exception, pushing home businesses to HO 04 42 or commercial forms. Libel, slander, false arrest, and privacy offenses require the HO 24 82 Personal Injury endorsement.
Why the exam cares: Testers probe what the base form leaves out — home business liability and personal injury offenses are the two canonical gaps.
Numbers to memorize
- $1,000 per person — default Coverage F Medical Payments limit; HO 04 14 raises it (commonly $2,000, $5,000, or $10,000)
- $1,000 per occurrence — Damage to Property of Others additional coverage, paid at replacement cost without regard to fault
- 26 feet — owned sailing vessels at or above this length are excluded from base Section II liability
- 25 HP — owned outboard engines above this horsepower are excluded from base Section II liability
- 50 HP — inboard/inboard-outdrive horsepower gate used in the personal watercraft endorsement structure
- Under 24 — full-time students living away from home can remain insureds; under 21 applies to non-relative residents in an insured's care
Common traps
- Confusing Coverage F with Coverage E — remember medical payments is no-fault and per person for non-residents, while personal liability requires legal liability and applies per occurrence.
- Confusing Damage to Property of Others with a liability claim — remember it pays up to $1,000 at replacement cost as a goodwill payment even when the insured is not legally liable.
- Confusing which household members need HO 04 48 — remember resident RELATIVES are insureds automatically; the endorsement exists for non-relative household members.
- Confusing the watercraft buy-back scope — remember HO 24 06 and HO 24 70 extend liability and medical payments only; they never add hull or physical-damage coverage.
Before answering any Section II question, ask two screening questions — is the claimant a resident, and is legal liability required — and most answer choices eliminate themselves.
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