In order for a liability policy to cover a claim, who must be legally liable?

For a liability policy to cover a claim, it is essential that the party involved in the claim is classified as an "insured" under the policy. This means that the individual or organization must be specifically named or defined within the policy as eligible for coverage. Liability insurance is designed to protect the insured from claims made by third parties for damages or injury for which they are legally responsible.

The legal liability falls upon the insured to satisfy the conditions of the policy. If an insured party is found liable for causing bodily injury or property damage to another, the liability policy will provide coverage for the resulting claims, up to the policy limits. This ensures that the insured has the financial backing to handle claims made against them, promoting both personal security and legal protection in the event of accidental incidents.

In contrast, the other options involve parties who do not have a direct relationship with the liability insurance policy. A random person or a bystander who is not identified as an insured under the policy has no coverage under it. Moreover, the insurance company is not liable simply by virtue of the situation; they provide the coverage but are not the ones bearing legal liability. Thus, the correct answer reflects the foundational principle of liability insurance, which is that coverage applies when the claims are brought