Other Than Life (OTL) Practice Exam

What does liability insurance typically cover?

1. Damage to your own property

2. Injuries or damages caused to other individuals

3. Loss of personal assets

4. Theft of personal belongings

The correct answer is: Injuries or damages caused to other individuals

Liability insurance is designed to protect individuals or businesses from the financial repercussions of causing harm to others or their property. Specifically, it provides coverage for bodily injuries and property damage that an insured party may be legally obligated to pay due to their actions or negligence. This means that if a person causes an accident that injures someone else or damages someone else's property, liability insurance helps cover the legal costs and settlements associated with those claims, thereby protecting the insured from potentially significant financial loss. In contrast, the other options are not relevant to what liability insurance covers. Damage to your own property, loss of personal assets, and theft of personal belongings are typically covered by other types of insurance, such as homeowners or renters insurance, rather than liability insurance. This distinction is key in understanding the specific protections that liability policies provide.