Personal Auto Policy: Liability and Medical Payments
This domain tests Parts A and B of the personal auto policy: liability and medical payments. Expect covered-auto definitions, split limits, exclusions, and the difference between liability and no-fault medical payments.
Part A - liability
- Covers bodily injury and property damage for which the insured is legally liable because of an auto accident.
- Split limits are stated as per-person bodily injury, per-accident bodily injury, and per-accident property damage.
- Covered autos include listed autos, newly acquired autos, temporary substitute autos, and non-owned autos used with permission.
- Supplementary payments include defense costs, bail bonds, and loss of earnings up to a daily limit; defense costs are generally outside the liability limit.
Part B - medical payments
- Pays reasonable medical and funeral expenses for the insured and passengers because of an auto accident, regardless of fault.
- Subject to a per-person limit; it is not liability insurance and does not pay for property damage or pain and suffering.
- In no-fault states, personal injury protection may replace or supplement medical payments.
Exclusions
Intentional or expected injury, using a vehicle for livery or racing, workers' compensation injuries, and vehicles furnished for regular use are common exclusions. An owned auto not listed on the policy is generally excluded.
Worked example
A driver borrows a friend's car with permission and injures a pedestrian. The driver's PAP can respond under the non-owned auto provision, but the friend's policy is primary for the owner's vehicle. Medical payments under the driver's PAP may pay the driver's own medical bills, subject to the limit, while the pedestrian's claim is handled under liability.
Traps
Do not treat medical payments as liability coverage. Do not assume a borrowed car is covered if it is furnished for regular use. Do not ignore livery and business-use exclusions.