6.2 Part A Liability and Supplementary Payments

Arkansas Property & Casualty Insurance State

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1 Standalone Coverage Map

Standalone Coverage Map

2 Introduction: Arkansas Property & Casualty Insurance Exam Overview

Arkansas Property & Casualty Exam Overview

3 National Portion: Insurance Fundamentals

1.1 Risk, Hazards, Perils, and the Law of Large Numbers 1.2 Insurable Interest, Indemnity, and Other Insurance Principles 1.3 Insurance Contract Law and Elements 1.4 Policy Structure: Declarations, Insuring Agreement, Conditions, Exclusions 1.5 Parties, Agents vs. Brokers, and Authority

4 National Portion: Property Insurance Concepts

2.1 Causes of Loss / Named-Peril vs. Open-Peril 2.2 Valuation: ACV, Replacement Cost, and Functional Value 2.3 Coinsurance and the Coinsurance Formula 2.4 Deductibles, Limits, and Loss Settlement 2.5 Common Property Policy Conditions and Clauses

5 National Portion: Dwelling Policies (DP)

3.1 Dwelling Policy Forms DP-1, DP-2, DP-3 3.2 Dwelling Coverages A-E and Other Coverages 3.3 Dwelling Perils, Conditions, and Endorsements 3.4 Mobile Home and Specialized Dwelling Coverage

6 National Portion: Homeowners Policies - Forms & Section I

4.1 Homeowners Forms HO-2 through HO-8 and Eligibility 4.2 Section I Coverages A-D and Additional Coverages 4.3 Section I Perils Insured Against and Exclusions 4.4 Replacement Cost vs. ACV and Loss Settlement in Homeowners

7 National Portion: Homeowners Policies - Section II & Endorsements

5.1 Section II Coverages E (Liability) and F (Medical Payments) 5.2 Homeowners Conditions and Duties After Loss 5.3 Common Homeowners Endorsements (scheduled property, water backup, ordinance or law)

8 National Portion: Personal Auto Policy - Liability & Injury

6.1 Personal Auto Policy Structure and Eligibility 6.2 Part A Liability and Supplementary Payments 6.3 Part B Medical Payments 6.4 Part C Uninsured/Underinsured Motorists

9 National Portion: Personal Auto Policy - Physical Damage & Duties

7.1 Part D: Coverage for Damage to Your Auto 7.2 Exclusions and Part E: Duties After an Accident 7.3 Part F: General Provisions, Endorsements, and No-Fault Concepts

10 National Portion: Liability Insurance Concepts

8.1 Negligence, Torts, and Legal Liability 8.2 Defenses, Damages, and Vicarious Liability 8.3 Occurrence vs. Claims-Made Triggers 8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

11 National Portion: Commercial Property Insurance

9.1 Commercial Package Policy Structure and Common Policy Conditions 9.2 Building and Personal Property Coverage Form (BPP) 9.3 Causes of Loss Forms (Basic, Broad, Special) 9.4 Business Income and Extra Expense 9.5 Commercial Property Endorsements and the BOP

12 National Portion: Commercial General Liability - Coverages

10.1 CGL Coverage A: Bodily Injury and Property Damage Liability 10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments 10.3 Who Is an Insured and Supplementary Payments

13 National Portion: Commercial General Liability - Limits, Triggers & Exclusions

11.1 CGL Limits of Insurance and Aggregates 11.2 Occurrence vs. Claims-Made CGL and Retroactive Dates 11.3 Key CGL Exclusions and Endorsements

14 National Portion: Commercial Auto Insurance

12.1 Business Auto Coverage Form and Covered Auto Symbols 12.2 Commercial Auto Liability and Physical Damage 12.3 Motor Carrier / Trucking and MCS-90 12.4 Garage Coverage Form and Garagekeepers 12.5 Commercial Auto Endorsements

15 National Portion: Workers Compensation

13.1 Workers Compensation Statutory Background and Benefits 13.2 Part One (Workers Comp) and Part Two (Employers Liability) 13.3 Premium Basis, Experience Modification, and Classification 13.4 Other States, USL&H, and Federal Acts 13.5 Workers Comp Exclusions and Endorsements

16 National Portion: Other Commercial Lines - BOP, Crime & Marine

14.1 Businessowners Policy (BOP) in Depth 14.2 Crime and Fidelity Coverage 14.3 Inland Marine and Nationwide Marine Definition 14.4 Ocean Marine Coverages (Hull, Cargo, Freight, P&I)

17 National Portion: Other Commercial Lines - Specialty & Professional

15.1 Farm and Agricultural Coverage 15.2 Commercial Umbrella and Excess Liability 15.3 Professional Liability and Errors & Omissions 15.4 Directors & Officers and Employment Practices Liability

18 National Portion: Other Commercial Lines - Surety, Flood & Specialty

16.1 Surety and Fidelity Bonds 16.2 National Flood Insurance Program (NFIP) 16.3 Cyber, Aviation, and Other Specialty Lines

19 National Portion: Insurance Regulation & Market Conduct

17.1 State Regulation, Licensing, and the McCarran-Ferguson Act 17.2 Rates, Forms, Solvency, and Guaranty Associations 17.3 Producer Authority, Fiduciary Duty, and Company Operations

20 National Portion: Ethics & Unfair Trade Practices

18.1 Unfair Trade Practices and Unfair Claims Settlement 18.2 Producer Ethics, Errors & Omissions Exposure, and Fiduciary Conduct 18.3 Privacy, Fraud, and Consumer Protection

21 Chapter 1: Arkansas P&C Insurance Regulation & Licensing

1.1 Arkansas Insurance Department 1.2 Arkansas P&C Producer Licensing Requirements 1.3 Arkansas Producer Responsibilities

22 Chapter 2: Arkansas Property Insurance

2.1 Arkansas Homeowners Insurance 2.2 Arkansas Commercial Property Insurance

23 Chapter 3: Arkansas Casualty & Auto Insurance

3.1 Arkansas Auto Insurance Requirements 3.2 Arkansas Liability Insurance 3.3 Arkansas Workers' Compensation Insurance

24 Chapter 4: Arkansas Ethics & Professional Conduct

4.1 Ethical Practices and Consumer Protection

6.2 Part A Liability and Supplementary Payments

Key Takeaways Explain This Topic AI

Part A pays BI and PD the insured is legally liable for and is third-party coverage; defense costs and supplementary payments are paid in addition to the limit.

An insured includes you, family members using any auto, permissive users of a covered auto, and organizations vicariously liable (with the non-owned/non-hired condition).

Split limits like 100/300/50 cap BI per person, BI per accident, and PD per accident separately; amounts above the caps are the insured's personal obligation.

A Combined Single Limit pools BI and PD into one flexible amount, advantageous for a severe single-victim claim.

Trap exclusions: intentional acts, carrying persons/property for a fee, regular-use non-covered autos, fewer-than-four-wheel vehicles, and using a vehicle without a reasonable belief of entitlement.

Last updated: June 2026

Part A - Liability Coverage

Part A is the heart of the PAP. The insuring agreement promises the insurer will pay damages for bodily injury (BI) or property damage (PD) for which any insured becomes legally responsible because of an auto accident. It also obligates the insurer to defend the insured, with defense costs paid in addition to the limit of liability (defense outside limits is a recurring exam point).

Liability coverage is third-party coverage: it protects the insured's assets by paying people the insured injures or whose property the insured damages. It never pays the insured's own injuries (that is Parts B and C) or the insured's own vehicle (Part D).

Who Is an Insured Under Part A

The definition of "insured" expands well beyond the named insured. For Part A, an insured is:

You or any family member for the ownership, maintenance, or use of any auto or trailer (family members are covered even in vehicles you do not own, subject to exclusions);

Any person using your covered auto with permission;

Any person or organization legally responsible for acts of a covered person while using a covered auto (e.g., an employer when an employee runs an errand in the insured's covered auto);

Any person or organization legally responsible for the named insured's or a family member's use of any vehicle other than a covered auto , but only if that vehicle is not owned or hired by that person or organization.

A "family member" is a person related by blood, marriage, or adoption who is a resident of the household, including a ward or foster child.

Split Limits vs. Combined Single Limit (Worked Numerics)

Most PAPs use split limits , written as three numbers such as 100/300/50 :

$100,000 - maximum BI per person ;
$300,000 - maximum BI per accident (all persons combined);

$50,000 - maximum property damage per accident .

Worked example. An insured causes a crash injuring three people - claims of $80,000, $120,000, and $60,000 - and does $40,000 of PD. Under 100/300/50:

Person 1: $80,000 (under the $100k per-person cap) - paid in full.

Person 2: capped at $100,000 (the $120k claim exceeds the per-person limit).

Person 3: $60,000 - paid in full.

BI subtotal = $80,000 + $100,000 + $60,000 = $240,000 , within the $300k per-accident cap.

PD = $40,000, within the $50k cap - paid in full.

Insurer pays $280,000; the insured personally owes the remaining $20,000 of Person 2's claim.

A Combined Single Limit (CSL) instead provides one pooled amount for BI and PD together. With a $300,000 CSL , the same accident ($240,000 BI + $40,000 PD = $280,000) is paid in full with no per-person sublimit - the CSL is more flexible for severe single-victim claims.

Supplementary Payments

In addition to the limit of liability , Part A pays:

Supplementary Payment Detail
Defense costs All costs of defending a suit
Bail bonds Up to $250 for a bond required by a covered accident
Appeal bonds & bonds to release attachments Premiums paid by insurer
Interest on judgment Post-judgment interest the insured owes
Loss of earnings Up to $200/day to attend hearings/trials at the insurer's request
Other reasonable expenses Incurred at the insurer's request

Key Part A Exclusions (Traps)

Intentional injury the insured expects or intends.

Property owned or being transported by the insured, and property rented to, used by, or in the care of the insured (with a narrow exception for a residence/garage rented to the insured for PD).

Vehicles used to carry persons or property for a fee (car-pool sharing is allowed).

Liability arising from a vehicle with fewer than four wheels or designed mainly for off-road use.

A vehicle owned by or furnished/available for the regular use of the named insured but not a covered auto - and the same for a family member (the family-member exclusion is narrower: it does not bar coverage for the named insured's regular-use vehicle).

Using a vehicle without a reasonable belief of being entitled to do so.