What does a "liability policy" cover?

A liability policy primarily provides coverage for claims against the insured for bodily injury or property damage they cause to third parties. This means that if an insured person causes an accident that results in injury to another person or damage to someone else's property, the liability policy will cover the associated legal costs and any resulting settlements or judgments up to the limits of the policy.

This type of coverage is essential for protecting individuals and businesses from the financial consequences of lawsuits and claims that may arise from their actions or negligence. It addresses the responsibility of the insured for damages claimed by others, which is a fundamental aspect of liability insurance.

Other options do not accurately represent the scope of a liability policy. Coverage of personal property damage typically refers to property insurance rather than liability coverage. Protection against natural disasters usually falls under specific types of property insurance like homeowners or renters insurance, not liability insurance. Medical expenses for the insured are generally covered by health insurance or personal injury protection, not a liability policy, which focuses on the insured’s responsibility to others.