The very first part, Part A ,of the personal auto policy or the PAP provides bodily injury and property damage liability protection to any insured who is legally responsible for an automobile accident because of their negligent behavior. As with other liability policies, the insurer agrees to pay defense costs until the limit of liability specified on the Declarations Page has been reached by payment of judgments or settlements.

Auto Liability Insurance Limits: The auto liability insurance limits are selected by the applicant and apply to each covered accident. Note that many non-standard insurers may only provide one set of liability limits, normally the minimum limit required by state laws!! The most recent edition of the personal auto policy is written with split limits, but it can be amended to provide protection based on single limit coverage.

Split Limit Liability Insurance:
With split limits, there are three separate dollar amounts specified in the Auto Policy Declaration Page, such as $20,000/$40,000/ $15,000, that apply to each accident. The first limit is the maximum amount of money that will be paid by your insurance company to any one person suing you for bodily injury; the second limit is the total that will be paid by your insurance company for all bodily injury claims by others against your at fault accident; and the third limit applies to the total property damage claims.

Single Limits Liability Insurance: With a single limit, there is one amount that applies in the total to all bodily injury and property damages claims resulting from an at fault auto accident. The limits available vary often range from $50,000 to $500,000 or more.  Under no circumstance it the aggregate is below the state aggregate minimum limits.

Example: Sonia's PAP provides split limits under Part A of $50,000/100.000/50,000. In an at fault auto accident, Sonia injures two people in another vehicle. One is awarded damages of $35,000 and the other is awarded damages of $85,000. Their damaged vehicle, valued at $60,000, is totally destroyed. The insurance company will pay only $100,000 of the $120,000 awards to the other two people because that is the per accident policy limit for bodily injury (the $100,000 will be split proportionally between the two injured people). The insurance company will only pay $50,000 for the damaged to vehicle because that is the policy’s property damage limit.

The auto insurance policy specifies that the insurer's limit of liability shown in the declarations is the most the insurance company will pay, regardless of the number of insureds, claims made, vehicles or premiums shown in the declarations, or vehicles involved in any accident. For example, if a child is involved in an auto accident while driving a family car, the son and both parents might be sued. The policy limits only apply once, not three times. However, if the child has a policy separate than the parents, then the child policy may have to share the cost of the claims too.

Out of State Auto Accidents: The car policy also contains a condition that amends the limits of liability insurance to meet the limits mandated in a state where an crash occurs if it is a state other than the one where the insured auto is principally located. Any other mandatory coverage, such as no-fault benefits, are also provided for out-ofstate crashes. If you live adjacent to a state which requires higher liability limits than your state, you auto insurance rate have been adjusted to reflect the chance that you might be causing an accident in an area with higher liability limits.

Other Payments, Defense Cost: The PAP also provides certain supplementary payments for expenses arising from an accident covered by the policy. These payments, like defense costs, are in addition to the stated liabilitylimits. They areup to $250 for bail bonds
  • interest occurring after a judgment
  • up to $200 per day for loss of wages due to attendance at hearings or trials
  • other reasonable expenses incurred at the insurer’s request
The above is a discussion with focus on the ISO's Personal Auto Policy. Note that your policy may be similar the ISO, better, or may have adopted lower standards. You need to read your actual policy!.
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