6.2 Part A Liability and Supplementary Payments

Part A - Liability Coverage

Part A is the heart of the PAP. It pays damages an insured becomes legally liable to others for bodily injury (BI) and property damage (PD) arising out of the ownership, maintenance, or use of an auto. It also provides a duty to defend the insured in any suit seeking covered damages, with defense costs paid in addition to the limit of liability.

The insuring agreement is broad and third-party-focused: it protects the insured's assets by paying people the insured injures or whose property the insured damages. It does not pay the insured's own injuries (that is Part B) or the insured's own vehicle damage (Part D).

Who is an "insured" for Part A

Part A extends liability protection to a tiered list:

• 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 a covered person (e.g., an employer) while that person uses a covered auto.
• Any person or organization legally responsible for your use of a non-owned auto - but only for that specific use.

Trap: A permissive user of your covered auto is an insured even for their own employer's vicarious liability, but coverage for non-owned autos is narrower - it follows the named insured/family member, not just anyone.

Limits: split limits vs. combined single limit

Part A limits appear two ways. The exam loves the arithmetic.

Split limits are written as three numbers, e.g., 100/300/50:

• $100,000 maximum BI per person
• $300,000 maximum BI per accident (all injured persons combined)
• $50,000 maximum PD per accident

Worked example: An at-fault insured carrying 100/300/50 injures three people with adjudicated BI of $90,000, $150,000, and $130,000, and causes $60,000 in property damage. The first claimant collects $90,000 (under the $100k per-person cap). The second collects $150,000. The third's $130,000 is reduced to $60,000 because the $300,000 per-accident BI cap is reached after $90k + $150k = $240k, leaving only $60k. Property damage of $60,000 is capped at the $50,000 PD limit. Total paid: $300,000 BI + $50,000 PD = $350,000; the insured personally owes the remaining $70,000 BI + $10,000 PD = $80,000.

A Combined Single Limit (CSL) instead gives one pool for both BI and PD per accident, e.g., a $300,000 CSL. The same accident above (BI $90k + $150k + $130k = $370k, PD $60k = $430k total) would pay the full $300,000 and stop - the insured owes $130,000. CSL is more flexible because there is no separate per-person sub-limit, so a single catastrophically injured claimant can access the entire pool.

Trap: With split limits, leftover PD limit cannot be borrowed to pay BI and vice-versa. CSL removes that silo - this distinction is a frequent exam item.

Supplementary payments (paid IN ADDITION to the limit)

Part A pays the following on top of the liability limit, so they never erode the limit available to claimants:

Memory hooks: the $250 bail bond cap and the $200/day lost-earnings cap are routinely tested numbers.

Key Part A exclusions

Part A liability does not apply to: intentional injury or damage; property owned or being transported by an insured; property rented to, used by, or in the care of the insured (with a limited exception for residences/private garages); bodily injury to an employee covered by workers compensation; and vehicles used as a public/livery conveyance (except share-the-ride carpools).

It also excludes using a vehicle without a reasonable belief of permission and racing on a track. Coverage for any vehicle (other than your covered auto) furnished or available for the insured's regular use is excluded - the classic 'company car' / 'furnished-for-regular-use' trap. There is no coverage while the insured is employed in the auto business (selling, repairing, servicing, storing, or parking) for losses arising from that work, except for the named insured or family member operating their own covered auto.

Single Limit Versus Split Limits

Part A liability may be written with a combined single limit (CSL), a single amount available for any combination of bodily injury and property damage per accident, or with split limits shown as three numbers, such as 100/300/50. The first number caps bodily injury per person, the second caps bodily injury per accident, and the third caps property damage per accident. A split-limit fact pattern with three injured claimants tests both the per-person cap and the per-accident ceiling, and any excess becomes the insured's personal exposure.

Who Is an Insured for Liability

Part A extends to a broad set: the named insured and family members in any auto, any person using your covered auto with reasonable belief of permission, and any person or organization legally responsible for acts of a covered person while using a covered auto. This is why a permissive user driving the insured's car is covered, and why the insured's employer can be an additional insured for the insured's covered-auto use, but only as respects that covered auto.

Supplementary Payments and Key Exclusions

Beyond the limit, Part A pays supplementary payments: defense costs, up to a stated bail-bond amount (commonly $250) after an accident, premiums on appeal and attachment bonds, interest accruing after judgment, and reasonable expenses including lost earnings (commonly $200 a day) at the insurer's request. Liability is excluded for intentional injury, property the insured owns or transports, vehicles used to carry persons or property for a fee (excluding share-the-expense carpools), and using a vehicle without a reasonable belief of permission. These exclusions recur in scenario questions.