Coverage E pays damages the insured becomes legally liable to pay for bodily injury or property damage to third parties arising out of the insured's personal acts, ownership of premises, or ownership of certain personal property (including watercraft and snow vehicles under specified limits).
- Worldwide territorial scope for personal acts: Coverage E typically follows the insured for personal liability arising anywhere in the world. A guest the insured injures while travelling abroad is generally within coverage.
- Owned premises, covers liability for incidents at the insured premises (slip and fall on the icy driveway) and at temporary residences (vacation rental, hotel).
- Personal acts, covers the insured's legal liability for acts not connected to the premises (the insured injuring someone in a recreational accident).
- Exclusions, intentional acts, business pursuits (insure separately under a commercial liability policy), professional services, ownership/use of most motor vehicles (which fall under the auto policy), and dwelling-rented-to-others exposures (insure under a landlord policy).
- Voluntary medical payments (Coverage F), small no-fault medical payments to third parties injured on the premises, regardless of the insured's legal liability. Designed to settle minor injuries before they become litigation.
Recommended minimum personal liability limits are $1,000,000 and $2,000,000 is increasingly the norm, with umbrella excess available above. A judgment that exceeds the limit reaches the insured's personal assets directly.
Common mistake: assuming Coverage E covers business activities run from the home. It does not. Home-based business liability is excluded under most personal lines forms. Even a small online sales business needs a separate commercial liability arrangement.
⚠️ Trap: Coverage E excludes intentional acts. A client who "warned" someone before a confrontation may find their defence excluded, the insurer's duty to defend is conditional on the alleged conduct being potentially within coverage.
Recall: What is the typical territorial scope of personal liability for personal acts? Name three categories Coverage E excludes.