6.2 Part A Liability and Supplementary Payments

Part A: Liability Coverage

Part A is the heart of the PAP and the coverage most states mandate. It promises to pay damages for bodily injury (BI) or property damage (PD) for which any insured becomes legally responsible because of an auto accident. Coverage includes the insurer's duty to defend the insured, even against groundless suits, and the duty to settle.

Part A can be written two ways. Under a split limit, three numbers appear, such as 100/300/50, meaning $100,000 BI per person, $300,000 BI per accident, and $50,000 PD per accident. Under a combined single limit (CSL), one number (for example $300,000) applies to the total of all BI and PD arising from one accident. Exams love split-limit math, so practice the allocation rules.

Worked Split-Limit Example

Assume limits of 100/300/50. An at-fault insured injures three people and damages property:

The driver and Passenger 2 are each capped at the $100,000 per-person figure; Passenger 1's full $90,000 is paid; the BI total of $290,000 stays under the $300,000 per-accident cap; and property damage of $60,000 is cut to the $50,000 PD limit. Total insurer payout = $340,000. The insured personally owes the uninsured remainder of $50,000 (BI) plus $10,000 (PD).

Supplementary Payments

Part A pays supplementary payments in addition to the limit of liability — they do not erode the Declarations limit. The standard PAP list includes:

• Up to $250 for the cost of bail bonds required because of an accident, including related traffic law violations.
• Premiums on appeal bonds and bonds to release attachments in any suit the insurer defends.
• Interest accruing after a judgment is entered in a suit the insurer defends, until the insurer pays or tenders its limit (postjudgment interest).
• Up to $200 a day for loss of earnings (not other income) because of attendance at hearings or trials at the insurer's request.
• Other reasonable expenses incurred at the insurer's request.

A classic trap: defense costs and these supplementary payments are paid on top of the policy limit, so a 100/300/50 policy can pay more than $450,000 total once defense and supplementary amounts are added.

Key Part A Exclusions

• Intentional injury or damage caused by an insured.
• Property the insured owns or is transporting, or property rented to/in the care of the insured (covered by other forms).
• Bodily injury to an employee of an insured in the course of employment (workers compensation applies), except a domestic employee not covered by WC.
• Liability arising from using a vehicle as a public or livery conveyance (ride-share without endorsement) or while employed in the auto business.
• Using a vehicle the insured does not own and that is furnished for regular use.

Combined Single Limit Versus Split Limit

When a policy is written on a combined single limit (CSL), all bodily injury and property damage from one accident share one pool. Using a $500,000 CSL on the earlier three-claimant example, the insurer simply pays the lesser of total damages and $500,000, with no per-person sublimit to trap individual large claims.

CSL therefore protects an insured better when a single severely injured claimant exceeds a per-person split limit but the total stays under the aggregate. Split limits, by contrast, are cheaper and are the form most state minimum laws are written in (for example a 25/50/25 statutory minimum).

Be ready to convert a CSL fact pattern: a $300,000 CSL has no separate property-damage cap, so a $60,000 PD claim that would be cut to $50,000 under 100/300/50 is paid in full under the CSL as long as the aggregate remains available.

Out-of-State Coverage and Financial Responsibility

Part A contains an out-of-state coverage provision that is a favorite exam item. When the insured drives into a state or province whose compulsory or financial responsibility law requires higher liability limits than the policy carries, the PAP automatically increases the insured's limits to meet that state's minimums. If another state's law requires a nonresident to maintain a particular type of coverage, the policy provides at least the required minimum amounts and types. This is why a 25/50/25 policy from a low-minimum state still satisfies the law when the insured drives into a higher-minimum jurisdiction.

Limit of Liability Wording

The Part A Limit of Liability clause states that the amount shown is the most the insurer will pay regardless of the number of insureds, claims, vehicles, or persons in the accident. This single-limit-per-accident cap stops claimants from arguing that each named insured carries a separate limit.

A separate clause says any amount payable under Part A is reduced by amounts paid for the same damages under Part B or Part C, preventing the insured from collecting the same loss twice across coverage parts. When two or more autos are insured under the policy, the limits are not added together (no stacking) for one accident unless state law compels stacking.