6.2 Part A Liability and Supplementary Payments

The Insuring Agreement

Under Part A - Liability Coverage, the insurer pays damages for bodily injury (BI) or property damage (PD) for which any insured becomes legally liable because of an auto accident. The insurer also has a duty to defend the insured in any suit asking for such damages, even if the suit is groundless, false, or fraudulent.

That duty is powerful but not unlimited: the insurer's obligation to defend ends when it has paid the applicable limit of liability through settlement or judgment. After the limit is exhausted, the insured may have to fund their own defense.

Insureds Under Part A

An insured for liability 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 your acts (vicarious liability), such as an employer when you drive your own car on the job.
• Any person or organization legally responsible for an insured's use of a covered auto.

This layered definition extends protection well beyond the named insured to permissive users and to others who could be sued for the insured's driving.

Limits: Split vs. Combined Single Limit

Liability limits are written two ways. A combined single limit (CSL) is one number that caps all BI and PD per accident. Split limits are three numbers separated by slashes - for example 100/300/50, meaning $100,000 per person for BI, $300,000 per accident for BI, and $50,000 per accident for PD.

Worked Split-Limit Example

An insured with 25/50/25 limits causes an accident injuring three people: claims of $30,000, $20,000, and $15,000, plus $30,000 in PD.

• Person 1 capped at the per-person limit of $25,000 (loses $5,000).
• Persons 2 and 3 paid in full ($20,000 + $15,000).
• Total BI = $25,000 + $20,000 + $15,000 = $60,000, but the per-accident BI cap is $50,000, so the insurer pays $50,000 for BI.
• PD of $30,000 is capped at the $25,000 PD limit, paying $25,000.

Total insurer payment: $75,000; the insured owes the remaining $15,000 personally.

Supplementary Payments

Supplementary payments are paid in addition to the limit of liability - they do not erode it. The PAP lists:

Because these sit on top of the limit, a 100/300/50 policy can pay far more than $300,000 once defense and supplementary items are added.

Exclusions

Part A does not apply to:

• Intentionally caused bodily injury or property damage.
• Liability assumed under a contract (with limited exceptions).
• Property owned or being transported by the insured, or property in the insured's care (use the proper coverage instead).
• Vehicles used to carry persons or property for a fee (public/livery), except share-the-expense car pools.
• Racing or speed contests on a track.
• Use of a vehicle without a reasonable belief of permission.

Note the difference between the carrying for a fee exclusion and an ordinary employee driving for an employer, who remains insured.

How the Single Limit of Liability Caps Multiple Insureds

The PAP states that the limit of liability is the most the insurer will pay regardless of the number of insureds, claims, vehicles, or persons in the accident. This anti-stacking sentence is heavily tested: even if three insureds are sued for one accident, the per-accident limit is one ceiling, not multiplied by the number of insureds.

Worked Combined-Single-Limit Example

An insured carries a $300,000 CSL and causes an accident producing $220,000 in BI to three people and $110,000 in PD. Total demand = $330,000.

• With a CSL, BI and PD share one $300,000 pool.
• The insurer pays the first $300,000; the insured owes the remaining $30,000 personally.
• Defense and supplementary payments are paid on top, so a $300,000 CSL can cost the insurer well over $300,000 once attorney fees, post-judgment interest, and bail/appeal bonds are added.

Contrast a split limit (e.g., 100/300/50), where the per-person, per-accident, and PD caps each apply separately — a single severely injured claimant is capped at the per-person number even if the per-accident limit is far higher.

Out-of-State and Other-Insurance Rules

If the insured is in a state requiring higher minimum limits than the policy shows, Part A automatically increases to meet that state's minimum (the out-of-state provision). For liability on a non-owned auto the PAP is excess over the owner's policy; on the insured's owned covered auto it is primary.

Exam traps to lock in: the duty to defend ends once the limit is exhausted by judgment or settlement; supplementary payments do not erode the limit; the intentional-act, livery-for-fee, racing, and no-reasonable-belief-of-permission exclusions bar coverage; and an employee driving their own car for the employer is still an insured, distinct from the livery exclusion. A permissive user of your covered auto is an insured, but a person using it without a reasonable belief they are entitled to is not.