6.2 Part A Liability and Supplementary Payments

Part A - Liability Coverage

Part A is the heart of the PAP. The insuring agreement promises the insurer will pay damages for bodily injury (BI) or property damage (PD) for which any insured becomes legally responsible because of an auto accident. It also obligates the insurer to defend the insured, with defense costs paid in addition to the limit of liability (defense outside limits is a recurring exam point).

Liability coverage is third-party coverage: it protects the insured's assets by paying people the insured injures or whose property the insured damages. It never pays the insured's own injuries (that is Parts B and C) or the insured's own vehicle (Part D).

Who Is an Insured Under Part A

The definition of "insured" expands well beyond the named insured. For Part A, an insured is:

• You or any family member for the ownership, maintenance, or use of any auto or trailer (family members are covered even in vehicles you do not own, subject to exclusions);
• Any person using your covered auto with permission;
• Any person or organization legally responsible for acts of a covered person while using a covered auto (e.g., an employer when an employee runs an errand in the insured's covered auto);
• Any person or organization legally responsible for the named insured's or a family member's use of any vehicle other than a covered auto, but only if that vehicle is not owned or hired by that person or organization.

A "family member" is a person related by blood, marriage, or adoption who is a resident of the household, including a ward or foster child.

Split Limits vs. Combined Single Limit (Worked Numerics)

Most PAPs use split limits, written as three numbers such as 100/300/50:

• $100,000 - maximum BI per person;
• $300,000 - maximum BI per accident (all persons combined);
• $50,000 - maximum property damage per accident.

Worked example. An insured causes a crash injuring three people - claims of $80,000, $120,000, and $60,000 - and does $40,000 of PD. Under 100/300/50:

• Person 1: $80,000 (under the $100k per-person cap) - paid in full.
• Person 2: capped at $100,000 (the $120k claim exceeds the per-person limit).
• Person 3: $60,000 - paid in full.
• BI subtotal = $80,000 + $100,000 + $60,000 = $240,000, within the $300k per-accident cap.
• PD = $40,000, within the $50k cap - paid in full.
• Insurer pays $280,000; the insured personally owes the remaining $20,000 of Person 2's claim.

A Combined Single Limit (CSL) instead provides one pooled amount for BI and PD together. With a $300,000 CSL, the same accident ($240,000 BI + $40,000 PD = $280,000) is paid in full with no per-person sublimit - the CSL is more flexible for severe single-victim claims.

Supplementary Payments

In addition to the limit of liability, Part A pays:

Key Part A Exclusions (Traps)

• Intentional injury the insured expects or intends.
• Property owned or being transported by the insured, and property rented to, used by, or in the care of the insured (with a narrow exception for a residence/garage rented to the insured for PD).
• Vehicles used to carry persons or property for a fee (car-pool sharing is allowed).
• Liability arising from a vehicle with fewer than four wheels or designed mainly for off-road use.
• A vehicle owned by or furnished/available for the regular use of the named insured but not a covered auto - and the same for a family member (the family-member exclusion is narrower: it does not bar coverage for the named insured's regular-use vehicle).
• Using a vehicle without a reasonable belief of being entitled to do so.