PAP Structure & Part A Liability

The Personal Auto Policy

The Personal Auto Policy (PAP) is the standard contract for insuring private passenger vehicles. It is organized into lettered parts, and the exam expects you to know what each part covers and how the definitions of insured and covered auto drive the answers.

Part A: Liability Coverage

Part A pays damages for bodily injury and property damage for which any insured becomes legally responsible because of an auto accident, and it provides a defense at the insurer's expense, even for groundless claims, with defense costs paid in addition to the limit. Part A can be written with a single limit (one amount per accident for all BI and PD combined) or split limits (separate per-person BI, per-accident BI, and per-accident PD amounts, written as 25/50/25 in Ohio's minimum).

Who Is an Insured Under Part A

The definition of insured is broad and heavily tested. It includes:

• You (the named insured) and any family member (a resident relative by blood, marriage, or adoption), for the ownership, maintenance, or use of any auto.
• Any person using your covered auto with permission.
• Any person or organization legally responsible for acts of a covered person while using your covered auto.
• For other autos, any person or organization legally responsible for the named insured's or family member's use, but only for that use.

This structure means a permissive user of your car is an insured, and you and your family members are insured even when driving someone else's car, subject to the other-auto rules. The exam tests scenarios such as a friend borrowing your car (insured) versus a stranger taking it without permission (not an insured).

Split Limits Worked Example

Suppose a PAP carries 25/50/25 limits and the insured causes an accident injuring two people, one with $30,000 in injuries and one with $20,000, and damaging $28,000 of others' property. The per-person BI cap is $25,000, so the $30,000 claimant collects only $25,000 from this coverage; the $20,000 claimant collects the full $20,000; the per-accident BI cap of $50,000 is not exceeded ($25,000 + $20,000 = $45,000). The property damage cap is $25,000, so of the $28,000 PD claim, the policy pays $25,000 and the insured owes the remaining $3,000 personally.

This worked allocation, applying the per-person cap first, then the per-accident cap, then the separate PD limit, is exactly how the exam tests split limits, and it explains why Ohio's minimum limits often leave an at-fault driver personally exposed for the excess.

Working Split Limits Cleanly

Part A liability is tested heavily through split-limit allocations, so apply the caps in order. For limits written as 25/50/25, first cap each injured person at the per-person figure ($25,000), then cap the total bodily injury per accident at the middle figure ($50,000), then apply the separate property damage limit ($25,000). Working the per-person cap before the per-accident cap prevents the most common allocation error.

A worked case under 25/50/25: three claimants with bodily injuries of $20,000, $20,000, and $30,000. Each is first capped at $25,000, so the third is reduced to $25,000, giving $20,000 plus $20,000 plus $25,000, or $65,000; but the $50,000 per-accident cap limits total bodily-injury payment to $50,000. Any property-damage claim draws separately on the $25,000 PD limit.

The broad definition of insured is the other Part A focus. You and resident family members are insureds for the use of any auto, and any permissive user of your covered auto is an insured, as is anyone legally responsible for a covered person's use of your covered auto. A friend who borrows your car with permission is an insured; a thief is not. Because defense costs are paid in addition to the limit, the full limit remains available for damages.

When a scenario describes who was driving and whose car it was, determine the insured status first, then apply the limit structure to find the payment.

Apply split limits in strict order, per-person bodily-injury cap on each claimant, then the per-accident bodily-injury cap on the total, then the separate property-damage limit, because working the per-accident cap before the per-person cap is the most common allocation error. The definition of insured is broad: the named insured and resident family members are insured in any auto, and any permissive user of your covered auto is an insured, while a thief is not. Because Part A defense costs are paid in addition to the limit, the full limit remains available to pay damages.

Keep in mind that the property-damage limit in a split-limit policy is entirely separate from the bodily-injury limits, so a single accident can exhaust the property-damage limit while leaving bodily-injury coverage intact, or vice versa, and the at-fault driver remains personally responsible for any damages in either category that exceed the applicable limit.