Study guide
5.1 Section II Coverages E (Liability) and F (Medical Payments)
Arkansas Property & Casualty Insurance State
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1 Standalone Coverage Map
Standalone Coverage Map
2 Introduction: Arkansas Property & Casualty Insurance Exam Overview
Arkansas Property & Casualty Exam Overview
3 National Portion: Insurance Fundamentals
1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority
4 National Portion: Property Insurance Concepts
2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses
5 National Portion: Dwelling Policies (DP)
3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage
6 National Portion: Homeowners Policies - Forms & Section I
4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners
7 National Portion: Homeowners Policies - Section II & Endorsements
5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)
8 National Portion: Personal Auto Policy - Liability & Injury
6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists
9 National Portion: Personal Auto Policy - Physical Damage & Duties
7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts
10 National Portion: Liability Insurance Concepts
8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
11 National Portion: Commercial Property Insurance
9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP
12 National Portion: Commercial General Liability - Coverages
10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments
13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions
11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements
14 National Portion: Commercial Auto Insurance
12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements
15 National Portion: Workers Compensation
13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements
16 National Portion: Other Commercial Lines - BOP, Crime & Marine
14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)
17 National Portion: Other Commercial Lines - Specialty & Professional
15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability
18 National Portion: Other Commercial Lines - Surety, Flood & Specialty
16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines
19 National Portion: Insurance Regulation & Market Conduct
17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations
20 National Portion: Ethics & Unfair Trade Practices
18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection
21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing
1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities
22 Chapter 2: Arkansas Property Insurance
2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance
23 Chapter 3: Arkansas Casualty & Auto Insurance
3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance
24 Chapter 4: Arkansas Ethics & Professional Conduct
4.1 Ethical Practices and Consumer Protection
5.1 Section II Coverages E (Liability) and F (Medical Payments)
Key Takeaways Explain This Topic AI
Coverage E (Personal Liability) pays only when the insured is legally liable; it is worldwide, written per-occurrence, ISO default $100,000.
Coverage F (Medical Payments to Others) pays reasonable medical expenses on a no-fault basis, ISO default $1,000/person, expenses within 3 years.
Defense costs and supplementary payments (bail up to $250, loss of earnings up to $250/day) are paid IN ADDITION to the Coverage E limit.
Coverage F never pays the named insured or regular household residents; it is for outsiders and excludes workers' comp-eligible persons.
Last updated: June 2026
5.1 Section II Coverages E (Liability) and F (Medical Payments)
Section II of the ISO Homeowners program (current edition HO 00 03 03 22 , with the broad HO 3 special form the most-tested) is the liability half of the policy. Where Section I pays for damage to the insured's own property (first-party), Section II responds when the insured is legally responsible for harming someone else (third-party). Two coverages carry the load: Coverage E - Personal Liability and Coverage F - Medical Payments to Others .
Learn the distinction cold, because exam writers love to test it: Coverage E pays only when the insured is legally liable ; Coverage F pays an injured non-resident's medical bills regardless of fault .
Coverage E - Personal Liability
Coverage E pays sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD) caused by an occurrence to which the coverage applies. An occurrence is an accident, including continuous or repeated exposure to substantially the same harmful conditions, that results in BI or PD during the policy period.
Three features show up constantly on exams:
Worldwide territory - Coverage E applies anywhere on earth, not just at the residence premises. A liability act committed while the insured is on vacation abroad can trigger it.
Duty to defend - The insurer must provide a legal defense even if the suit is groundless, false, or fraudulent. Defense costs are paid in addition to the limit of liability.
Single limit - Coverage E is written as a per-occurrence limit. The ISO default is $100,000 , commonly raised to $300,000 or $500,000. There is no separate annual aggregate on the personal HO form.
When Coverage E pays vs. supplementary payments
The duty to defend, plus several supplementary payments , sit on top of the Coverage E limit. The supplementary payments include:
- Supplementary payment Limit / rule
- Defense costs & attorney fees Unlimited; in addition to limit
- First-aid expenses to others at time of accident Reasonable, by the insurer
- Bail bonds (accident/traffic law related to covered occurrence) Up to $250
- Loss of earnings to attend hearings/trial at insurer's request Up to $250 per day
- Post-judgment interest Paid in full
- Reasonable expenses incurred at insurer's request Reasonable amount
Trap: Because defense and supplementary payments are outside the limit, a $300,000 Coverage E limit is never eroded by the cost of defending the insured. The insurer's duty to defend ends only when it has paid out the applicable limit in settlement of the claim.
Coverage F - Medical Payments to Others
Coverage F pays the reasonable and necessary medical expenses of a person (other than an insured) who is injured. It is a no-fault, goodwill coverage: the injured party does not have to prove the insured was negligent. The ISO default limit is $1,000 per person , raised commonly to $5,000.
Coverage F applies to expenses incurred within three years from the date of the accident, and it covers a person:
On the insured location with the insured's permission, or
Off the insured location, if the BI arises out of a condition on the insured location, is caused by the insured's activities, is caused by a residence employee in the course of employment, or is caused by an animal owned by/in the care of an insured.
Who Coverage F does NOT cover
Coverage F is for outsiders , never the household. It does not pay:
The named insured or any regular resident of the household (except a residence employee).
Any person eligible to receive benefits under a workers' compensation or similar disability law.
Persons injured by war , or as a result of a business activity or rented-premises exposure.
Worked example - split vs. combined: A neighbor's child is hurt on the insured's trampoline. Coverage F (limit $5,000) pays the $2,800 emergency-room bill with no lawsuit , regardless of fault. If the parents later sue for $90,000 in pain-and-suffering damages, that claim moves to Coverage E , where negligence must be established. Any Coverage F amount already paid for the same injury is typically credited against a later Coverage E settlement.
Section II additional coverages
Beyond E and F, Section II includes several additional coverages paid at no extra premium and generally in addition to the limits :
Claim expenses - costs the insurer incurs and expenses the insured incurs at the insurer's request, plus the per-day loss-of-earnings and bail amounts noted above.
First aid expenses - reasonable first-aid expenses for bodily injury to others at the time of an accident; the insured will not be reimbursed for first aid to an insured .
Damage to property of others - pays up to $1,000 per occurrence for property of others damaged by an insured, on a replacement-cost, no-fault basis. It does not apply to property owned by an insured, damage caused intentionally by an insured age 13 or older, or property covered under Section I.
Trap: Damage to Property of Others is a goodwill payment - it pays even when the insured is not legally liable , but it will not pay if the insured age 13 or older caused the damage intentionally . A 12-year-old breaking a neighbor's window on purpose is paid; a 14-year-old doing the same is not.
Who is an insured under Section II
The definition of insured controls who gets liability protection. It includes the named insured and the spouse if a household resident, resident relatives , and any other person under 21 in the care of an insured. It also extends - for liability arising out of certain animals or vehicles - to a person or organization legally responsible for animals or watercraft owned by an insured (unless used in business or without consent).
The insured location definition matters too: it includes the residence premises , other premises the insured acquires during the term, non-owned premises where the insured is temporarily residing, vacant land, individual or family cemetery plots, and premises occasionally rented for non-business purposes. Liability that arises from a location not meeting this definition (for example, a separately rented commercial building) is excluded and points the candidate toward a commercial policy.