What does "liability insurance" cover?

Liability insurance is specifically designed to provide coverage for claims made against the insured due to actions that result in bodily injury or property damage to others. This type of insurance protects the policyholder from the financial repercussions of legal claims that stem from accidents, negligence, or other incidents for which they are found responsible. Thus, it serves as a safeguard against monetary losses that could arise from lawsuits or settlements related to these claims.

While medical expenses for the insured and lawsuit defense costs may be encompassed under certain policies, they are not the primary focus of liability insurance. Damage specifically to the insured's property is typically covered by other types of insurance, such as homeowners or auto insurance, rather than liability policies. Understanding the scope and purpose of liability coverage is key in grasping how it functions to shield individuals and businesses from potentially significant financial burdens due to unforeseen incidents.