6.2 Part A Liability and Supplementary Payments

Part A: The Mandatory Third-Party Coverage

Part A - Liability is the core of the PAP and the coverage that states make compulsory. It is third-party coverage: it pays others when an insured becomes legally liable for an auto accident. Part A responds to two damage categories: Bodily Injury (BI) to others and Property Damage (PD) to others' property. It is liability coverage, so the insured's own injuries and own vehicle are handled by Parts B, C, and D, not Part A.

Part A also carries the insurer's duty to defend: the insurer must provide and pay for a legal defense for any covered suit, even one that is groundless, false, or fraudulent. That duty ends once the insurer has paid the applicable limit through settlement or judgment.

Split Limits vs. Combined Single Limit (Worked Numerics)

Liability limits are written one of two ways. Split limits appear as three numbers, e.g., 50/100/50 (in thousands):

Worked example: With 50/100/50, an accident injures three people for $40,000, $45,000, and $60,000. The first two are paid in full ($40k + $45k). The third is capped at the $50,000 per-person limit (not $60k). Total BI = $40k + $45k + $50k = $135,000, but the per-accident cap is $100,000, so the insurer pays only $100,000 of BI plus PD separately.

A Combined Single Limit (CSL), e.g., $300,000, is one pooled amount for BI and PD combined per accident, giving more flexibility.

Supplementary Payments (Paid IN ADDITION to the Limit)

Supplementary payments are paid on top of the Part A limit, not inside it. Memorize the four dollar figures and the open-ended items:

• Up to $250 for the cost of bail bonds required because of a covered accident.
• Premiums on appeal bonds and bonds to release attachments, up to the insurer's limit of liability.
• Interest accruing after a judgment until the insurer pays/tenders its limit.
• Up to $200 per day for loss of earnings for attending hearings/trials at the insurer's request.
• All defense costs and reasonable expenses the insured incurs at the insurer's request.

Worked example: A $100,000 judgment is entered against an insured carrying a $100,000 limit. The insurer also spent $30,000 defending the suit. Because defense costs are supplementary, the insurer pays $100,000 + $30,000 = $130,000 total.

Out-of-State Coverage and Other Insurance

The PAP includes an out-of-state coverage provision: if an insured drives in a state with a higher compulsory limit or a required no-fault/financial-responsibility benefit than the policy provides, Part A automatically increases to meet that state's minimum. This prevents an insured from being underinsured simply by crossing a state line.

The Other Insurance condition makes Part A on a non-owned auto excess over any other collectible insurance, while coverage on the insured's owned auto is primary. When two PAPs apply, each pays its pro-rata share based on the proportion its limit bears to the total of all applicable limits.

Single Limit vs. Split Limits

Part A liability may be written as a combined single limit (CSL) — one amount for all bodily injury and property damage per accident (e.g., $300,000 CSL) — or as split limits like 100/300/50. With split limits, the second number ($300,000) is the per-accident BI cap and the first ($100,000) is the per-person BI cap.

Worked example under 100/300/50: three people are injured for $80,000, $120,000, and $90,000. The $120,000 claimant is capped at the $100,000 per-person limit; total BI of $80,000 + $100,000 + $90,000 = $270,000 fits under the $300,000 per-accident cap, so all are paid in full except the $20,000 over one person's limit.

Supplementary Payments

Part A pays supplementary payments in addition to the limit: defense costs, up to $250 for bail bonds, premiums on appeal/release bonds, post-judgment interest, loss of earnings up to $200/day to attend trial at the insurer's request, and reasonable expenses incurred at the insurer's request. These do not erode the policy limit — a common test point.

Liability Exclusions That Recur

Part A's exclusions are tested directly: intentional injury, property owned or being transported by the insured, vehicles used as a public/livery conveyance (ride-share without endorsement), liability arising from a business of selling/servicing autos, using a vehicle without reasonable belief of permission, and using a vehicle (other than the covered auto) the insured owns or has available for regular use. The livery exclusion is the modern flashpoint for ride-share drivers, who need a specific endorsement or commercial policy.

Out-of-State Coverage and the Other-Insurance Rule

Part A includes an out-of-state coverage provision: if an insured drives into a state requiring higher limits or a compulsory coverage the policy lacks, the PAP automatically provides the minimum that state demands. For non-owned autos, the PAP is excess over the vehicle owner's policy. So when an insured borrows a friend's car and causes an accident, the owner's policy pays first and the borrower's PAP pays excess — a frequently tested coordination rule that determines which liability policy responds first.