6.2 Part A Liability and Supplementary Payments

What Part A Covers

Part A - Liability Coverage is the core of the PAP and the coverage states mandate. It is third-party coverage: it pays others when an insured is legally liable for an auto accident. Two damage categories apply:

Part A combines BI and PD into a single insuring agreement and adds the insurer's duty to defend the insured against any covered suit, even if groundless or fraudulent. The duty to defend ends when the insurer has paid the limit of liability through settlement or judgment.

How Limits Are Written

Split limits

The classic format is three numbers - BI per person / BI per accident / PD per accident. Read 100/300/100 as:

• $100,000 maximum BI to any one person
• $300,000 maximum BI for all persons in one accident
• $100,000 maximum PD in one accident

Worked example - split limits. You are at fault and four people are injured. Limits are 100/300/100.

Person 1 is capped at the $100,000 per-person limit. The remaining claimants share what is left under the $300,000 per-accident cap, so Person 4 collects only $30,000. The excess $60,000 is the uncovered gap the insured owes personally.

Combined Single Limit (CSL)

A CSL of $300,000 is one pooled amount for BI and PD combined per accident, with no per-person sub-limit. Using the same four injuries plus $20,000 PD, a $300,000 CSL would pay up to $300,000 across all of it - more flexible than split limits.

Supplementary Payments

Part A pays the following in addition to the limit of liability - they do not erode the limit:

• Defense costs and attorney fees the insurer incurs
• Premiums on appeal bonds and bonds to release attachments
• Up to $250 for the cost of bail bonds required because of an accident
• Post-judgment interest that accrues on the judgment
• Up to $200 per day for the insured's lost earnings to attend hearings/trial at the insurer's request
• Other reasonable expenses incurred at the insurer's request

Key Exclusions

Part A does not cover: intentional injury/damage; property the insured owns or is transporting; damage to property rented to, used by, or in the care of the insured (except a residence or private garage); liability while the auto is used as a public or livery conveyance (rideshare carve-back varies); using a vehicle without a reasonable belief of permission; and liability arising from the auto business (selling, repairing, parking) unless the insured is an eligible covered person.

Split Limits vs. Combined Single Limit

Part A liability limits appear two ways, and the exam expects you to read both:

• Split limits are written as three numbers, e.g., 100/300/50: $100,000 bodily injury per person, $300,000 BI per accident, and $50,000 property damage per accident.
• Combined single limit (CSL) is one figure (e.g., $300,000) covering all BI and PD from an accident with no internal per-person cap.

Worked Split-Limit Scenario

An at-fault insured carrying 100/300/50 injures three people for $150,000, $80,000, and $60,000 and causes $70,000 in property damage. The per-person cap limits the first claimant to $100,000; the other two are paid $80,000 and $60,000; total BI = $240,000, within the $300,000 per-accident limit. Property damage of $70,000 is capped at the $50,000 PD limit. The insured owes the uncovered $50,000 (BI cap) plus $20,000 (PD cap) personally. Working a three-claimant split-limit problem is a near-certain exam item.

Supplementary Payments

Beyond the limit, Part A pays supplementary payments that do not reduce the limit of liability:

• Up to $250 per day for lost earnings to attend trial at the insurer's request.
• Bail bonds up to $250 following an accident.
• All defense costs and attorney fees when the insurer defends.
• Interest accruing on a judgment.
• Other reasonable expenses the insured incurs at the insurer's request.

Who Is Covered for Liability

Part A liability extends to the named insured and family members in any auto, any permissive user of your covered auto, and any person/organization vicariously liable for an insured's use of a covered auto. Recognizing that a permissive borrower of the insured's car is covered — and that the insured's liability follows them into a borrowed car — explains most Part A "who pays" questions.

Out-of-State and Single-Limit Coverage Provisions

Part A includes an out-of-state coverage provision: if an insured drives into a state requiring higher minimum limits or compulsory coverages (such as no-fault PIP), the PAP automatically increases to meet that state's required minimums. This prevents an insured from being underinsured simply by crossing a border. The insurer never pays more than once for the same element of loss, and the higher out-of-state minimum applies only while the insured operates in that state — a portability feature the exam tests against multi-state fact patterns.