Personal Auto Policy (PAP) Liability Coverages

Fast Facts

The Personal Auto Policy (PAP) has three main liability coverages:

• Part A—Liability Coverage: Covers defense costs, supplementary payments (e.g., $250 bail bond, appeal bonds, post-judgment interest, loss of earnings), and split limits for bodily injury (per person and total) and property damage.
• Part B—Medical Payments Coverage: Pays minor medical expenses regardless of fault, with a single limit per accident.
• Part C—Uninsured/Underinsured Motorists Coverage: Protects against uninsured (e.g., no insurance, hit-and-run, or insolvent insurer) or underinsured drivers (lower liability limits than insured’s UIM).

Part A—Liability Coverage

Key Importance: Liability coverage is the most critical part of the PAP, protecting insureds from financial ruin due to legal responsibility for an auto accident.

Insuring Agreement

The insurer pays for:

• Bodily injury or property damage the insured is legally responsible for in an auto accident.
• Defense costs for covered claims, even if coverage is unclear, until the liability limit is exhausted.

Legal responsibility is determined by negligence, either through a court or the insurer’s investigation. Coverage applies only to auto accidents (e.g., collisions or vehicle overturns).

Who Is an Insured

• Named insured and resident family members when using any auto.
• Anyone using the named insured’s covered auto.
• Persons/organizations liable for acts/omissions from an insured’s use of a covered auto.
• Persons/organizations liable for acts/omissions from an insured’s or family member’s use of any auto.

Example: Allison negligently crashes while delivering flowers for her employer. Her PAP covers her and her employer’s liability and defense costs.

Supplementary Payments

Includes:

• Up to $250 for bail bonds.
• Premiums on bonds/appeal bonds.
• Post-judgment interest, loss of earnings, and reasonable expenses.

Key Liability Exclusions

Exclusion	Description
Intentional Injury/Damage	Not covered if against public policy (e.g., intentional acts or illegal use).
Owned/Transported Property	No coverage for damage to insured’s own property.
Care, Custody, or Control	No coverage for damage to others’ property in insured’s possession (except rented residences/garages).
Employee Injury	No coverage for employee injuries during work, except domestic workers not under workers’ compensation.
Public/Livery Use	No coverage for vehicles used as taxis or similar.
Business Use—Commercial Trucks	No coverage for commercial vehicle use.
Nonpermissive Use	No coverage for drivers without permission (except family members using covered auto).
Vehicles < 4 Wheels	No coverage for motorcycles, golf carts, etc.
Noncovered Autos	No coverage for unlisted vehicles owned or regularly used by insured/family.
Racing Vehicles	No coverage for vehicles in racing facilities.

Transportation Network Companies (TNCs)

PAP excludes coverage for TNC activities (e.g., Uber, Lyft) as they involve commercial use. TNCs provide commercial coverage, but gaps may exist between PAP and TNC coverage.

Limit of Liability

Coverage uses split limits (e.g., 20/40/15):

• $20,000 per person for bodily injury.
• $40,000 total for bodily injury per accident.
• $15,000 for property damage per accident.

Some policies use a combined single limit (e.g., $50,000 for all losses).

Example: Rick’s 20/40/50 policy pays up to $20,000 per person, $40,000 total for bodily injury, and $50,000 for property damage per accident.

Out-of-State Coverage

Automatically adjusts liability limits to meet the minimum requirements of the state where the insured is driving.

Part B—Medical Payments Coverage

Pays minor medical expenses regardless of fault, reducing lawsuits. Optional in most states, may be replaced by PIP in no-fault states.

Insuring Agreement

Covers necessary medical/funeral expenses within 3 years of the accident for:

• Named insured and family members (broadest coverage).
• Occupants of the covered auto.

Exclusions

Similar to Part A, including vehicles with fewer than four wheels, public/livery use, noncovered vehicles, and racing.

Limit of Liability

Single limit per person per accident, non-stackable regardless of number of policies or vehicles.

Example: Joe’s $50,000 medical payments limit applies per person, not stackable across his three insured cars.

Part C—Uninsured/Underinsured Motorists Coverage

Protects against uninsured (UM) or underinsured (UIM) drivers.

Uninsured Motor Vehicle:

• No liability insurance.
• Hit-and-run vehicle.
• Insurer denies coverage or is insolvent.

Underinsured: Driver’s liability limits are lower than insured’s UM/UIM limits.

Insuring Agreement

Covers bodily injury (and sometimes property damage) caused by an uninsured/underinsured motorist’s negligence. Protects:

• Named insured/family as pedestrians, in any auto, or in covered auto.
• Others in the covered auto.

Exclusions

Includes noncovered vehicles, public/livery use, nonpermissive use, and racing.

Limit of Liability

Per person limit for bodily injury, subject to a total limit per accident, non-stackable.

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