What happens to supplemental payments under Coverage E?

Supplemental payments under Coverage E, which is part of your liability insurance, are designed to cover certain expenses incurred by the insurer that do not directly affect the policy's liability limits. One key aspect of supplemental payments is that they specifically cover legal defense costs, providing resources necessary for defending the insured in court.

These payments are separate from the liability limit and do not reduce the available limit for settling claims against the insured. This distinction is important, as it allows policyholders to have robust support during legal proceedings without the worry that these costs will diminish their coverage in other areas.

The other options do not accurately reflect how supplemental payments function. For example, they do not count against liability limits or fall under basic coverage limits; rather, they are treated as additional benefits. Additionally, they are not subject to a specific cap like $500; instead, they cover legal defense costs comprehensively as long as the policy remains in effect.