Key Takeaways
- Part A provides third-party coverage for bodily injury (BI) and property damage (PD) caused by the insured
- Liability limits are expressed as SPLIT LIMITS (e.g., 100/300/100) or as a Combined Single Limit (CSL)
- Split limits: First number = BI per person, Second = BI per accident, Third = PD per accident
- Defense costs are paid IN ADDITION to policy limits — insurer has duty to defend even groundless claims
- State minimum liability limits vary widely — Florida requires only 10/20/10, while Alaska requires 50/100/25
Part A: Liability Coverage
Part A is the most important coverage in the PAP — it protects you financially when you're legally responsible for injuring others or damaging their property.
What Part A Covers
Third-party coverage for damages you're legally liable for:
| Coverage | What It Pays For |
|---|---|
| Bodily Injury (BI) | Medical expenses, lost wages, pain and suffering, death |
| Property Damage (PD) | Damage to other people's property (vehicles, buildings, etc.) |
Understanding Liability Limits
Split Limits
The most common way to express auto liability limits:
Format: BI per person / BI per accident / PD per accident
Example: 100/300/100
- $100,000 — Maximum BI per person
- $300,000 — Maximum BI per accident (all persons combined)
- $100,000 — Maximum PD per accident
How Split Limits Work
Scenario: You cause an accident injuring 4 people and damaging a car.
| Injured Person | Medical Bills | Policy Pays | Gap |
|---|---|---|---|
| Person 1 | $150,000 | $100,000 | $50,000 |
| Person 2 | $80,000 | $80,000 | $0 |
| Person 3 | $90,000 | $90,000 | $0 |
| Person 4 | $50,000 | $30,000 | $20,000 |
| Total BI | $370,000 | $300,000 | $70,000 |
| Property Damage | $15,000 | $15,000 | $0 |
Key Points:
- Person 1 is limited to $100,000 (per-person limit)
- Total BI is limited to $300,000 (per-accident limit)
- Person 4 only gets $30,000 (what remains of the $300,000)
Combined Single Limit (CSL)
One limit covering ALL damages:
Example: $500,000 CSL
- Covers any combination of BI and PD
- More flexible than split limits
- Often preferred by higher-net-worth individuals
Split Limits vs. CSL
| Feature | Split Limits | CSL |
|---|---|---|
| Format | 100/300/100 | $500,000 |
| Flexibility | Less | More |
| Per-person cap | Yes | No |
| Premium | Usually lower | Usually higher |
State Minimum Liability Requirements
Every state (except NH) requires minimum liability coverage:
| State | Minimum Limits | Notes |
|---|---|---|
| California | 15/30/5 | Lowest PD in nation |
| Florida | 10/20/10 | Very low limits |
| Texas | 30/60/25 | Higher than most |
| New York | 25/50/10 | Moderate |
| Alaska | 50/100/25 | Highest state minimum |
Warning: State minimums are typically INADEQUATE. A serious accident can easily exceed $100,000 in damages.
Who Is Insured Under Part A?
For YOUR Covered Auto
| Person | Covered? |
|---|---|
| Named insured | YES |
| Resident spouse | YES |
| Resident family members | YES |
| Anyone with permission | YES |
For NON-OWNED Vehicles
| Person | Covered? |
|---|---|
| Named insured | YES |
| Resident family members | YES |
| Anyone else | NO |
Defense Coverage
Duty to Defend
The insurer will:
- Investigate the claim
- Defend you in court
- Pay defense costs (attorney fees, expert witnesses, court costs)
Defense Costs Are ADDITIONAL
Key Concept: Defense costs are paid in addition to policy limits.
Example:
- Policy limit: $100,000
- Defense costs: $30,000
- Settlement: $100,000
- Total insurer pays: $130,000
Supplementary Payments
Part A also covers these expenses in addition to limits:
| Payment | Coverage |
|---|---|
| Bail bonds | Up to $250 |
| Bond premiums | For release of attachment |
| Interest | Accruing after judgment |
| Lost wages | For attending trials |
| Reasonable expenses | Investigation cooperation |
Part A Exclusions
Coverage does NOT apply to:
| Exclusion | Example |
|---|---|
| Intentional injury | Deliberately hitting someone |
| Property you own | Damaging your own fence |
| Property in your care | Borrowed vehicle you damage |
| Business use vehicles | Company-owned vehicles |
| Public livery | Using car as a taxi |
| Racing | Participating in organized racing |
| Vehicles with fewer than 4 wheels | Motorcycles, ATVs |
An auto policy has limits of 50/100/50. What is the maximum that will be paid for bodily injury to ONE person?
Defense costs under Part A Liability are:
A friend borrows your car with permission and causes an accident. Under your PAP Part A:
5.3 Part B: Medical Payments Coverage
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