6.2 Part A Liability and Supplementary Payments

Part A: Liability Coverage

Part A is the core of the PAP. It pays damages for bodily injury (BI) and property damage (PD) for which any insured becomes legally responsible because of an auto accident. It also provides the duty to defend the insured against suits seeking those damages. Part A is third-party coverage: it protects others the insured injures or whose property the insured damages, not the insured's own injuries or vehicle.

Who Is an Insured Under Part A

Part A is broad on the persons it protects:

• You or any family member for the ownership, maintenance, or use of any auto or trailer (including non-owned autos).
• Any person using your covered auto with reasonable belief of permission.
• Any person or organization legally responsible for acts of a covered person while using a covered auto (e.g., an employer for an employee running a business errand in the insured's car, with restrictions).

Split Limits vs. Combined Single Limit

Liability limits are written one of two ways. Split limits state three numbers — per-person BI / per-accident BI / per-accident PD. A combined single limit (CSL) provides one pooled amount for all BI and PD in an accident.

Worked Split-Limit Example

An insured carries 100/300/50 and causes an at-fault accident injuring three people: $120,000, $90,000, and $40,000 in BI, plus $60,000 of PD.

• Person 1: claim $120,000, but the per-person cap is $100,000 -> insurer pays $100,000.
• Person 2: $90,000 (under cap) -> pays $90,000.
• Person 3: $40,000 (under cap) -> pays $40,000.
• BI subtotal = $230,000, within the $300,000 per-accident cap -> all paid.
• PD: claim $60,000, but PD cap is $50,000 -> pays $50,000.

Insurer pays $280,000; the insured personally owes $20,000 of BI excess plus $10,000 of PD excess = $30,000.

Supplementary Payments — Paid IN ADDITION to the Limit

A defining feature of Part A: defense costs and supplementary payments do not reduce the limit of liability. With a $100,000 limit, a $100,000 settlement plus $30,000 of defense costs is all payable — the defense does not eat into the indemnity. Supplementary payments include:

• Up to $250 for the cost of bail bonds required because of an accident.
• Premiums on appeal bonds and bonds to release attachments.
• Interest on the judgment accruing after entry of 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 Part A Exclusions

The exam tests these exclusions heavily:

• Intentional injury caused by an insured.
• Damage to property owned or being transported by an insured (use property coverage, not auto liability).
• Vehicles used as a public or livery conveyance (taxi/ride-hail in passenger-carrying status) — share-the-expense car pools are an exception and remain covered.
• Using a vehicle without a reasonable belief of permission.
• Vehicles with fewer than four wheels or designed mainly for off-road use.
• Liability arising from the auto business (selling, repairing, servicing, parking) unless the insured is the named insured/family member.

Worked Split-Limit and Combined-Single-Limit Examples

Part A liability is most often written with split limits such as 100/300/50, meaning 100,000 dollars bodily injury per person, 300,000 dollars bodily injury per accident, and 50,000 dollars property damage per accident. If an at-fault insured injures three people for 80,000, 120,000, and 60,000 dollars, the per-person cap of 100,000 limits the second and third claimants, and the per-accident cap of 300,000 limits the total; here the insurer pays 80,000 + 100,000 + 100,000 (capped by per-person) = 280,000 for injuries, within the 300,000 accident cap.

A combined single limit of 300,000 dollars instead provides one pooled amount for all bodily injury and property damage.

Who Is an Insured for Liability

Part A insureds include the named insured and resident family members for any auto, any person using the covered auto with permission, and any person or organization legally responsible for the acts of a covered person while using a covered auto (vicarious liability), plus, for the named insured and family, liability while driving a non-owned auto. This is why a permissive user causing an accident in the insured's car is covered, and why the policy can extend to the named insured driving a borrowed vehicle, subject to the other-insurance rules.

Supplementary Payments Paid in Addition to the Limit

Part A pays supplementary amounts on top of the liability limit: the cost of defense, premiums on bonds (appeal bonds and bonds to release attachments up to stated amounts), post-judgment interest, up to a daily amount for lost earnings to attend trial at the insurer's request, and other reasonable expenses incurred at the insurer's request. Because these are outside the limit, a 100,000-dollar liability limit can yield far more than 100,000 dollars in total insurer outlay once defense and supplementary payments are added.

Key Part A Exclusions

Part A excludes intentional injury, property owned or transported by the insured, property in the insured's care, liability arising from using a vehicle to carry persons or property for a fee (livery), business use of vehicles other than private passenger autos, using a vehicle without a reasonable belief of permission, and liability while employed in the auto business (with limited exceptions). It also addresses the use of a vehicle the insured owns but did not list (the owned-but-not-insured trap), which is excluded for the named insured's other owned autos.

Recognizing livery use, intentional acts, and the owned-but-not-insured situation is essential, because these are the recurring Part A exam denials.