South Carolina Personal Lines Practice Exam

What type of claim is covered under Coverage H?

1. Medical Payments

2. Personal Liability

3. Property Damage

4. Renters Insurance

The correct answer is: Personal Liability

Coverage H in a personal lines insurance policy, typically found in homeowners or dwelling policies, refers to Personal Liability coverage. This component of the policy is designed to protect the insured from financial loss in the event they are held legally responsible for causing bodily injury or property damage to others. In the context of personal liability, this includes legal defense costs and any settlements or judgments that might be awarded against the insured as a result of claims made by third parties. For example, if a visitor sustains an injury while on the insured property and files a lawsuit, Coverage H would help cover the legal expenses as well as any compensation owed, up to the policy limits. Understanding Coverage H as Personal Liability is crucial because it highlights the importance of having a safeguard against lawsuits and claims that could arise from everyday activities. In contrast, Medical Payments coverage typically applies to injuries sustained on the insured premises, but it does not extend to damage the insured is liable for. This is why the distinction between Personal Liability and other types of coverage is significant in understanding a homeowners policy's protection framework.