5.2 Part A: Liability Coverage
Key Takeaways
Part A provides third-party coverage for bodily injury (BI) and property damage (PD) the insured is legally liable for, and includes the insurer's duty to defend
Limits are written as split limits (e.g., 100/300/100) or as a Combined Single Limit (CSL); the split format is per-person BI / per-accident BI / per-accident PD
Supplementary payments — defense costs, up to $250 bail bonds, post-judgment interest, and up to $200/day for lost earnings to attend trial — are paid IN ADDITION to the limit
The duty to defend ends once the insurer pays the limit of liability through a settlement or judgment
State minimum limits are low and vary widely (Florida is among the lowest, Alaska's 50/100/25 is the highest minimum), and minimums are usually inadequate for serious claims
What Part A Covers
Part A — Liability Coverage is the heart of the PAP and the coverage states make mandatory. It is third-party coverage: it pays others when an insured is legally liable for an auto accident. Two damage categories apply:
| Coverage | Pays for |
|---|---|
| Bodily Injury (BI) | Others' medical bills, lost wages, pain and suffering, and death claims |
| Property Damage (PD) | Damage to others' property — vehicles, buildings, fences, light poles |
Part A combines both into a single insuring agreement and adds the insurer's duty to defend the insured against covered suits.
How Limits Are Written
Split Limits
The classic format is three numbers — BI per person / BI per accident / PD per accident. Read 100/300/100 as:
- $100,000 maximum BI to any one person
- $300,000 maximum BI for all persons in one accident
- $100,000 maximum PD in one accident
Worked example. You cause an accident, are at fault, and four people are injured. Limits are 100/300/100.
| Claimant | Proven BI | Part A pays | Uncovered gap |
|---|---|---|---|
| Person 1 | $150,000 | $100,000 (per-person cap) | $50,000 |
| Person 2 | $80,000 | $80,000 | $0 |
| Person 3 | $90,000 | $90,000 | $0 |
| Person 4 | $50,000 | $30,000 (only $30K of the $300K remains) | $20,000 |
| Total BI | $370,000 | $300,000 | $70,000 |
No one person can collect more than $100,000, and all BI together is capped at $300,000. PD has its own separate $100,000 limit and is not reduced by BI payments.
Combined Single Limit (CSL)
A CSL — say $500,000 — is one pool covering any mix of BI and PD with no per-person sub-limit. With a $500,000 CSL, a single badly injured claimant could collect the full $500,000.
| Feature | Split Limits | CSL |
|---|---|---|
| Written as | 100/300/100 | $500,000 |
| Per-person BI cap | Yes | No |
| Separate PD pot | Yes | No |
| Flexibility | Lower | Higher |
Supplementary Payments — Paid in Addition
Part A also pays certain costs on top of the limit of liability:
| Supplementary payment | Detail |
|---|---|
| Defense costs | Attorney fees, expert witnesses, court costs |
| Bail bonds | Up to $250 per bond from a covered accident |
| Appeal/attachment bonds | Premium for bonds (insurer need not apply for them) |
| Post-judgment interest | Interest accruing after a judgment |
| Lost earnings to attend trial | Up to $200 per day at the insurer's request |
| Other reasonable expenses | Incurred at the insurer's request |
Defense example: limit $100,000; settlement $100,000; defense costs $30,000 — the insurer pays $130,000 total because defense is supplementary.
Duty to Defend
The insurer has the duty to defend any suit seeking covered damages — even a groundless or fraudulent suit — and may settle a claim as it sees fit. Crucially, the duty to defend ends when the insurer has paid the limit of liability through a settlement or judgment. After that, the insured pays his own defense.
State Minimum Limits
| State | Minimum BI/BI/PD | Note |
|---|---|---|
| California | 30/60/15 (effective 2025) | Recently raised from 15/30/5 |
| Florida | 10/20/10* | *PD plus PIP; among the lowest |
| Texas | 30/60/25 | The familiar "30/60/25" |
| New York | 25/50/10 | Moderate |
| Alaska | 50/100/25 | Highest minimum |
Exam point: state minimums are a floor, not a recommendation. A single severe-injury claim can exceed $100,000, so producers should counsel limits well above the minimum.
Part A Exclusions (Highlights)
Part A does not cover intentional injury, damage to property the insured owns or is in the insured's care, bodily injury to an employee (workers' compensation responds), vehicles used as a public or livery conveyance (with a share-the-expense carpool exception), regular business use of non-covered vehicles, racing on a track, and vehicles with fewer than four wheels.
Who Is an Insured Under Part A
Part A's definition of insured is broader than many candidates expect. It includes "you" and any family member for the ownership, maintenance, or use of any auto or trailer; any person using your covered auto with permission; any person or organization legally responsible for acts of an insured while using your covered auto (vicarious liability); and any person or organization legally responsible for the named insured's or a family member's use of a non-owned vehicle (other than the owner of that vehicle).
This is why an employer can be an additional insured when an employee uses the insured's covered auto on company business — and why the policy must coordinate carefully with commercial coverage.
How Part A Pays a Third Party
Part A does not pay the insured directly; it pays the injured third party (or defends and indemnifies the insured against that party's claim). A typical claim sequence: the third party demands damages, the insurer investigates, accepts the duty to defend, negotiates a settlement within the limit, and pays the claimant. If the case proceeds to trial and a verdict exceeds the limit, the insurer pays its limit and any covered supplementary payments, and the insured is personally exposed for the excess — a powerful argument for buying higher limits or a personal umbrella policy.
Out-of-State Coverage and Financial Responsibility
The PAP contains an out-of-state coverage provision: when an insured drives into a state that requires higher liability limits or a compulsory coverage the insured did not buy (such as no-fault PIP), the policy automatically adjusts to provide at least the minimum required by that state. This keeps the insured legal while traveling and is a tested nuance — the policy effectively reads in the other state's compulsory minimums so the insured is never short on the road.
Limit Selection in Practice
| Insured profile | Reasonable Part A limit | Rationale |
|---|---|---|
| New driver, minimal assets | State minimum to 50/100/50 | Affordability while building a record |
| Typical household, some assets | 100/300/100 | Common "100/300" baseline |
| Higher net worth | 250/500/100 + umbrella | Protects assets from large judgments |
Practical note: liability limits should reflect the assets a judgment could reach, not the value of the car. A driver with a paid-off old vehicle but a home and savings still needs substantial Part A limits, because Part A protects net worth, not the auto.
An auto policy has limits of 50/100/50. What is the maximum Part A will pay for bodily injury to ONE person?
$50,000
$100,000
$150,000
$200,000
An insured with a $100,000 Part A limit is sued. The insurer pays a $100,000 judgment and incurs $30,000 in defense costs. How much does the insurer pay in total?
$100,000
$70,000
$130,000
$115,000
Under Part A supplementary payments, the PAP pays bail bonds up to what amount?
$100
$1,000
$500
$250
When does the insurer's duty to defend under Part A end?
When the lawsuit is first filed
When the insured hires a private attorney
When the insurer has paid the limit of liability through a settlement or judgment
The duty to defend never ends during the policy term
Sections you finish are checked off in the contents.