Principles of Risk Management and Insurance, 13th Edition

Part A: Liability Coverage

Liability coverage (Part A) is the most important part of the Personal Auto Policy, as legal liability arising from negligent use of an auto can be quite large. Liability coverage protects a covered person against a lawsuit or claim arising out of the ownership or operation of a covered vehicle.

Insuring Agreement

In the insuring agreement, the insurer agrees to pay any damages for bodily injury or property damage for which any insured is legally responsible because of an auto accident. The PAP is typically written with split limits. Split limits mean that the amounts of insurance for bodily injury liability and property damage liability are stated separately. For example, split limits of $250,000/$500,000/$100,000 ...