6.2 Part A Liability and Supplementary Payments

What Part A Covers

Part A - Liability Coverage is the heart of the auto policy and the only coverage states mandate. It promises that the insurer will pay damages for bodily injury (BI) or property damage (PD) for which any insured becomes legally responsible because of an auto accident. "Legally responsible" means the insured must be at fault - liability coverage is third-party coverage, paying others the insured injures, not the insured's own losses.

Alongside the duty to pay damages, the insurer assumes the duty to defend the insured against any covered suit, even if the allegations are groundless, false, or fraudulent. This defense obligation is enormously valuable and is provided in addition to the policy limit.

Bodily injury and property damage are defined broadly. Bodily injury means physical harm, sickness, or disease, including death that results. Property damage means physical injury to, destruction of, or loss of use of tangible property. Loss of use is important - a damaged delivery van that cannot operate generates a loss-of-use claim even after repairs are paid. The insurer's promise to pay is triggered by the insured's legal liability, established by a court judgment or by a settlement the insurer agrees to.

Split Limits vs. Combined Single Limit

Liability limits are written two ways. A split limit uses three numbers, such as 100/300/50:

A Combined Single Limit (CSL) instead provides one lump amount - say $300,000 - available for BI and PD combined, in any proportion, per accident. The CSL is more flexible because it is not subdivided.

Worked Split-Limit Example

An insured carrying 100/300/50 rear-ends a car at a light. Three people are hurt and the other vehicle is totaled:

• Driver injuries: $130,000 -> insurer pays $100,000 (capped by the per-person limit; the $30,000 excess is the insured's personal exposure).
• Passenger A: $80,000 -> insurer pays $80,000.
• Passenger B: $60,000 -> insurer pays $60,000.
• BI subtotal = $240,000, within the $300,000 per-accident cap.
• Vehicle damage: $42,000 -> insurer pays $42,000 (within the $50,000 PD limit).

Total insurer payment = $282,000. The same loss under a $300,000 CSL would be paid in full ($130,000 + $80,000 + $60,000 + $42,000 = $312,000... capped at $300,000), illustrating how the CSL can both help and cap differently than split limits.

Who Is Covered Under Part A

Part A liability extends to a layered set of insureds, a frequent exam target:

• You and any family member for the ownership, maintenance, or use of any auto or trailer.
• Any person using your covered auto with permission (and within the scope of that permission).
• Any person or organization legally responsible for acts of a covered person while using a covered auto — for example, an employer for a covered employee driving the insured's car on an errand.

The policy uses "your covered auto" (declared vehicles, newly acquired autos, trailers, and temporary substitutes when a covered auto is out of service) and the broader "any auto" for the named insured and family members. The distinction matters: a permissive user is covered only in your covered auto, not in their own vehicle. This is why a friend who borrows the insured's car is covered, but the insured driving the friend's car relies on the friend's policy first and the insured's as excess non-owned coverage.

Supplementary Payments

Supplementary payments are extra benefits paid in addition to the limit of liability when the insurer defends a covered claim. Under PP 00 01 they are:

• All defense costs the insurer incurs (attorney fees, investigation).
• Up to $250 for the cost of bail bonds required because of an accident.
• Premiums on appeal bonds and bonds to release attachments.
• Interest accruing after a judgment on the part the insurer owes.
• Up to $200 per day for loss of earnings when the insurer asks the insured to attend hearings or trial.
• Other reasonable expenses incurred at the insurer's request.

Because these are outside the limit, a policyholder with a 100/300/50 limit who incurs $40,000 in defense costs still has the full $100,000/$300,000/$50,000 available to pay damages.

Major Part A Exclusions (Tested Traps)

Part A does not apply when:

• The insured intentionally causes BI or PD.
• Damage is to property owned, used, transported by, rented to, or in the care of the insured (use a separate policy for your own goods).
• The vehicle is used as a public or livery conveyance (e.g., taxi) - but share-the-expense car pools are NOT excluded.
• A person uses a vehicle without a reasonable belief of being entitled to do so (the car-thief exclusion).
• The liability arises from operating a vehicle in the auto business (selling, repairing, servicing, storing, parking) unless it is a covered auto owned by the insured.

Trap: the public-livery exclusion is frequently paired with a carpool fact pattern. Sharing gas money among coworkers is covered; charging fare-paying strangers is excluded. Note that ride-share drivers (transportation network company use) are also excluded under the standard PAP and require a special endorsement or a commercial policy.

One further exclusion deserves attention: the owned-but-not-insured rule. Liability is excluded for any vehicle the insured owns or has available for regular use that is not the covered auto on the policy. This stops an insured from buying one PAP and expecting it to follow a second household car that was never declared and never charged premium. The exclusion is narrower for family members, who keep coverage in a non-owned vehicle furnished for their regular use only when the vehicle belongs to the named insured.