6.2 Part A Liability and Supplementary Payments

Part A - Liability Coverage

Part A is the heart of the PAP and the coverage states make compulsory through financial-responsibility laws. It pays damages an insured becomes legally liable for because of bodily injury (BI) or property damage (PD) arising out of the ownership, maintenance, or use of an auto.

The insurer also has the duty to defend the insured in any suit seeking covered damages, and the company selects defense counsel. This duty is broad - the insurer must defend even groundless or fraudulent suits - but it ends when the applicable limit of liability has been exhausted by payment of judgments or settlements. Once the limit is paid out, the insured must fund any further defense personally.

Who Is an Insured Under Part A

Part A defines insured more broadly than the physical-damage parts:

1. You or any family member for the ownership, maintenance, or use of any auto or trailer.
2. Any person using your covered auto with permission, within the scope of that permission.
3. Any person or organization legally responsible for the acts of a covered person while using a covered auto (vicarious liability of an owner, for example).
4. Any person or organization legally responsible for your or a family member's use of any auto - but only for a vehicle the insured does not own (e.g., an employer when you run a work errand in your own car).

Trap: a permissive user of a non-owned auto is NOT automatically a Part A insured unless they fall into category 1 (you or a family member).

Split Limits vs. Combined Single Limit

Most PAPs use split limits written as three numbers, e.g. 100/300/50 (in $000s):

• 100 = maximum BI per person
• 300 = maximum BI per accident (all persons combined)
• 50 = maximum PD per accident

A Combined Single Limit (CSL) instead provides one pooled amount (e.g., $300,000) for any combination of BI and PD per accident, giving the insured more flexibility when a single claimant's injuries are severe.

Worked example (100/300/50): A covered driver injures three people - $90,000, $120,000, and $150,000 - and causes $60,000 in property damage.

• Person 1: $90,000, under the $100k per-person cap, paid in full.
• Person 2: capped at $100,000 (per-person limit).
• Person 3: capped at $100,000 (per-person limit).
• BI subtotal = $90k + $100k + $100k = $290,000, under the $300k per-accident cap, so all $290,000 is paid.
• PD = $60,000 but capped at the $50,000 per-accident limit.
• Total paid = $340,000. The insured personally owes the uncovered $10,000 PD plus any BI above the caps.

Supplementary Payments (paid IN ADDITION to the limit)

Part A pays the following on top of the liability limit, so they never reduce the amount available for the claimant's damages. Because they sit outside the limit, an insured with 100/300/50 limits effectively receives more than $300,000 of total protection in a defended suit.

Trap: lost-earnings reimbursement is $200/day while bail bonds cap at $250. Exams frequently swap these two numbers, and they also test that supplementary payments are NOT subtracted from the policy limit.

Key Part A Exclusions

• Intentional injury or damage caused by an insured.
• Damage to property owned or being transported by the insured.
• Damage to property rented to, used by, or in the care of the insured, with a narrow exception for a residence or private garage.
• Bodily injury to an employee of the insured covered by workers compensation.
• Use of a vehicle as a public or livery conveyance (the ride-share-for-hire exclusion).
• Using a vehicle without a reasonable belief of being entitled to do so.
• Liability assumed under a contract (with limited exceptions).

These exclusions push business, intentional, and care-custody-and-control exposures onto other policies designed for them.

Supplementary Payments and the Single Limit

Part A pays, in addition to the limit of liability, certain supplementary payments: up to $250 per day for loss of earnings to attend trial at the insurer's request, the cost of bail bonds up to $250, premiums on appeal bonds, post-judgment interest, and other reasonable expenses the insured incurs at the insurer's request. These do not erode the limit. The PAP typically uses a single limit (e.g., $100,000 each accident) covering all BI and PD combined, though split limits (e.g., 100/300/50) are common — 100k per person, 300k per accident BI, 50k PD.

Key Part A Exclusions

Liability coverage does not apply to: intentional injury; property the insured owns, rents, or is transporting (use a cargo or property policy); bodily injury to an employee covered by workers' compensation; vehicles used as a public or livery conveyance (ride-share without endorsement); using a vehicle without a reasonable belief of permission; and using a vehicle (other than your covered auto) furnished or available for regular use. The last exclusion is why borrowing a friend's car occasionally is covered but driving a company car daily is not under the personal policy.