What does liability insurance cover?

Liability insurance is specifically designed to cover the legal obligations of the policyholder when they are found responsible for causing injury or damage to another person or their property. This type of insurance plays a critical role in protecting individuals and businesses from the financial repercussions that can arise from lawsuits or claims for damages resulting from accidents or negligence.

When someone is liable for an injury, liability insurance can help cover medical expenses, lost wages, and other damages awarded to the injured party, as well as the costs of defending against such claims. This coverage ensures that the insured does not face overwhelming financial burdens due to the accidents they unintentionally caused.

In contrast, the other options focus on specific types of coverage that are not encompassed by liability insurance. Property damage can be covered under separate policies, such as homeowners or auto insurance, but they do not address the liability aspect directly. Personal property losses and damage from natural disasters are typically covered under different insurance policies, like homeowners or renters insurance, which are focused on protecting the insured's property rather than addressing third-party claims for damages or injuries. Hence, the focus of liability insurance is on legal responsibilities and damages related to injuries caused to others, making it a crucial aspect of risk management in both personal and business contexts.