6.2 Part A Liability and Supplementary Payments

Part A - Liability Coverage

Part A is the heart 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 is third-party coverage: it protects others the insured injures or whose property the insured damages, not the insured's own injuries or car.

Part A also includes a critical promise: the insurer will settle or defend any covered suit, even one that is groundless, false, or fraudulent. Defense costs are paid in addition to the limit of liability and end when the insurer has paid out the applicable limit in settlement or judgment.

Who is an "insured" under Part A

The definition of insured is broader than just the named insured. Under Part A, insured means:

• You (named insured) and any family member (a resident relative by blood, marriage, or adoption, including a ward or foster child) for the ownership, maintenance, or use of any auto or trailer.
• Any person using your covered auto with permission (a permissive user).
• Any person or organization legally responsible for acts of a covered person while that person uses a covered auto (vicarious liability), and for non-owned autos only the named insured/family member's vicarious principals.

Key trap: a family member is covered driving any auto (including a borrowed one), while an outside permissive user is covered only in your covered auto.

Split limits vs. combined single limit (worked numerics)

Split limits 100/300/50. An insured runs a red light and injures three people and damages a storefront.

• Driver A: $130,000 in BI -> the per-person cap is $100,000, so Part A pays $100,000; the remaining $30,000 is the insured's exposure.
• Driver B: $80,000 -> paid in full, $80,000.
• Driver C: $40,000 -> paid in full, $40,000.
• Total BI demanded $250,000; total payable BI = $100,000 + $80,000 + $40,000 = $220,000, but the per-accident BI cap is $300,000, so the $220,000 is fully payable.
• Storefront PD: $60,000 -> the PD cap is $50,000, so Part A pays $50,000.

Total Part A indemnity = $270,000, plus defense costs paid in addition.

Combined single limit (CSL) $300,000. With one $300,000 CSL there is no per-person or per-coverage sublimit: BI and PD share one pool. The same loss above ($130k + $80k + $40k + $60k = $310,000) would be capped at $300,000 total. CSL is broader for a single large claimant because there is no per-person cap.

Single Limit vs. Split Limits

Part A liability can be written two ways. A combined single limit (CSL) is one amount for all bodily injury and property damage per accident (for example, $300,000 CSL). Split limits show three numbers — for example, 25/50/25 — meaning $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage per accident.

Worked example with 25/50/25: an at-fault insured injures two people, with damages of $30,000 and $20,000, and causes $28,000 of property damage. The per-person cap pays $25,000 (not $30,000) to the first victim and $20,000 to the second — within the $50,000 per-accident cap — and property damage is capped at $25,000 (not $28,000). The insured personally owes the uncovered $3,000 + $5,000 + $3,000.

Supplementary Payments and Who Is an Insured

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

"Insured" under Part A is broad: the named insured and resident family members for any auto, plus any person using your covered auto with permission, and any person or organization legally responsible for a covered insured's use. The recurring exam point is permissive use — a friend who borrows the insured's car with permission is an insured under Part A, while a thief is not.

Supplementary Payments

Part A pays the following Supplementary Payments in addition to the limit of liability (they do not reduce the limit):

• Up to $250 for the cost of bail bonds required because of an accident, including traffic-law violations arising out of use of a covered auto.
• The premium on appeal bonds and release-of-attachment bonds in any suit the insurer defends.
• Interest accruing on a judgment before the insurer pays/tenders its limit (post-judgment interest).
• Up to $200 per day for loss of earnings for time off work to attend hearings or trials at the insurer's request.
• Other reasonable expenses incurred at the insurer's request.

Memorize the two dollar figures: $250 bail and $200/day lost earnings.

Key Part A exclusions (traps)

Part A does not cover:

• Intentional bodily injury or property damage caused by an insured.
• Property owned by or being transported by the insured, and most property rented to, used by, or in the care of the insured (so damage to a borrowed garage is excluded).
• Liability while using a vehicle as a public/livery conveyance (rideshare-for-hire without an endorsement).
• Using a vehicle without a reasonable belief of being entitled to do so.
• Liability arising from the auto business (selling, repairing, servicing, parking) or other business use of vehicles other than a private passenger auto, pickup, van, or trailer.
• A vehicle with fewer than four wheels or designed mainly for use off public roads (so a dirt bike is excluded).

Out-of-state coverage and the financial responsibility trap

Part A contains an out-of-state coverage provision: if an accident happens in a state requiring higher liability limits than the policy carries, the PAP automatically raises the insured's limits to meet that state's minimum financial responsibility law. If the other state requires a compulsory no-fault or similar benefit, the policy provides at least that minimum. This keeps a traveling insured legal everywhere without buying separate coverage.

A second trap is the separation of insureds rule: Part A applies separately to each insured making a claim, but the most the insurer pays for any one accident is the single limit shown, no matter how many insureds or claimants are involved. The limit is never multiplied by the number of insureds. Finally, the duty to defend continues until the insurer has paid its full limit in settlement or judgment, so settling one claim can preserve defense for the remaining claimants.