6.2 Part A Liability and Supplementary Payments

What Part A Covers

Part A — Liability Coverage is the heart of the PAP. The insuring agreement states 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. "Legally responsible" means liability must be established — the PAP is a third-party coverage that responds when the insured negligently injures someone else or damages their property.

The insurer also has a separate duty to defend the insured against any covered suit, even one that is groundless or fraudulent. The insurer's right to defend or settle ends when it has paid the applicable limit of liability.

Split Limits vs. Combined Single Limit

Liability limits are written two ways.

• Split limits — shown as three numbers such as 100/300/50 (in thousands). The first number is the most paid per person for BI; the second is the most per accident for BI; the third is the most per accident for PD.
• Combined Single Limit (CSL) — one number, such as $300,000, that applies to all BI and PD in a single accident with no internal sublimits.

Worked Split-Limit Example

An insured carries 100/300/50 limits and is at fault in an accident that injures three people and damages a parked vehicle.

• Driver A: $130,000 in injuries — the policy pays $100,000 (capped by the $100,000 per-person limit; the extra $30,000 is the insured's exposure).
• Driver B: $90,000 in injuries — paid in full, $90,000.
• Driver C: $40,000 in injuries — paid in full, $40,000.
• Total BI claimed by the insurer = $100,000 + $90,000 + $40,000 = $230,000, which is under the $300,000 per-accident BI cap, so no further reduction.
• Property damage to the parked car: $60,000 — the policy pays $50,000 (the PD per-accident cap), leaving $10,000 uninsured.

Trap: The per-person limit is applied first, then the per-accident BI limit caps the total of all injury claims. PD is always separate and never borrows from the BI limits.

Reading PAP Part A Limits and Insureds

Personal Auto Part A – Liability can be written as a split limit (e.g., 100/300/50) or a Combined Single Limit. The PAP defines "insured" broadly for liability: you and family members using any auto; any person using your covered auto with permission; and any person or organization vicariously liable for the conduct of a covered person. This is why a permissive borrower of the insured's car is covered, and why an employer can be an insured when an employee drives the insured's covered auto on errands.

Supplementary Payments and Key Exclusions

Under Part A, supplementary payments are paid in addition to the limit: all defense costs, up to $250 for bail bonds, premiums on appeal/attachment bonds, interest accruing after judgment, loss of earnings up to $200/day for attendance at hearings/trial at the insurer's request, and other reasonable expenses.

Major Part A exclusions to memorize: intentional injury; property owned or being transported; vehicles used to carry persons or property for a fee (ride-share/livery); using a vehicle without a reasonable belief of permission; and liability while employed in the auto business (with narrow exceptions for the named insured's own covered auto).

Supplementary Payments — Paid in Addition to the Limit

The most-tested feature of Part A is that certain costs are paid on top of the liability limit, not within it. These supplementary payments include:

Trap: Defense costs and these supplementary payments do not erode the liability limit. A policy with a $100,000 per-person limit can still pay $100,000 to the claimant plus thousands in defense and supplementary costs.

Major Part A Exclusions

Part A does not cover:

• Intentional injury or damage caused at the insured's direction.
• Property owned, transported, rented to, or in the care of the insured (use a separate policy or bailee coverage).
• Bodily injury to an employee in the course of employment (workers compensation handles it), except a domestic employee not covered by WC.
• Using a vehicle as a public or livery conveyance — carrying persons or property for a fee (ride-share and delivery exposures need endorsements).
• A vehicle used in the auto business (repair, servicing, parking) by someone other than the named insured/family.
• Vehicles with fewer than four wheels or designed mainly for off-road use.
• Operating in a prearranged or organized racing or speed contest on a track.

Out-of-State Coverage

The out-of-state coverage provision automatically increases the insured's limits to satisfy a higher compulsory or financial-responsibility minimum in another state where the accident occurs. If the insured carries $25,000 BI per person but is in a state requiring $30,000, the limit is read up to $30,000 for that accident. The provision never reduces the insured's purchased limits below what they bought.