What does liability insurance cover?

Liability insurance primarily covers legal obligations for damages incurred by third parties due to the policyholder's actions or negligence. This includes costs related to bodily injury, property damage, and legal fees associated with defending against claims made by others. It is designed to protect individuals or businesses from financial losses that may arise from lawsuits or claims resulting from their activities.

This type of insurance ensures that if a policyholder is found legally responsible for causing harm or damage to another person or their property, the insurance will help cover those costs up to the policy limits. This is essential for individuals and companies as it provides a financial safety net, allowing them to operate responsibly without the constant fear of potentially devastating legal claims.

In contrast, other types of coverage mentioned do not fall under liability insurance. Losses from natural disasters would typically be covered by property or homeowners insurance, while damage to one's own property emphasizes personal coverage rather than liability to others. Costs associated with insurance fraud pertain to criminal acts and penalties, which are outside the scope of liability insurance's protective measures.