What is the purpose of "liability" coverage in insurance policies?

The purpose of "liability" coverage in insurance policies is specifically to protect against legal claims for injuries or damages that the insured may cause to another party. This type of coverage is essential because it helps to pay for legal defense costs, settlements, or judgments that result from incidents where the insured is deemed responsible for causing bodily injury or property damage to someone else.

For example, if someone is involved in a car accident and is found to be at fault, their liability coverage will help cover the costs of the other party's medical bills, lost wages, and any damage to their vehicle. By having liability coverage, individuals can safeguard their financial stability in the event of unexpected mishaps that may otherwise lead to significant out-of-pocket expenses due to legal claims against them.

Other options pertain to different areas of insurance. Coverage for losses from theft relates to personal property protection. Medical expenses of the insured pertain to health coverage or personal injury protection, while comprehensive coverage for a vehicle involves protection against non-collision incidents, such as theft or weather-related damage. Each of these options addresses separate types of risks unrelated to the legal claims aspect targeted by liability coverage.