What does liability insurance primarily cover?

Liability insurance primarily covers bodily injury and property damage that an insured party may cause to others. This type of insurance provides financial protection for individuals or businesses against claims resulting from injuries and damages for which they are legally responsible. It includes coverage for legal costs, medical expenses for the injured party, and compensation for damaged property, ensuring that the insured is protected from large out-of-pocket costs that could arise from lawsuits or claims against them. This aspect makes it a critical part of risk management for personal and commercial activities, where there is a potential for causing harm to third parties.

The other options outline different types of coverage that are not related to liability insurance. For example, loss of personal belongings pertains to property insurance, health-related expenses are typically covered by health insurance or personal accident insurance, and damage to the insurer’s property does not relate to liability coverage, as liability insurance focuses solely on the damages caused to others, not the insured's own assets.