Alabama Property and Casualty Practice Exam

Question: 1 / 400

What does liability insurance primarily cover?

Damage to the policyholder's own property

Bodily injury and property damage claims made by others

Liability insurance primarily covers bodily injury and property damage claims made by others. This type of insurance is designed to protect the policyholder from legal and financial responsibilities arising from incidents where they are deemed at fault. For instance, if a policyholder accidentally injures someone or causes damage to someone else's property, liability insurance helps cover the cost of the claims that may arise as a result of those incidents.

The coverage encompasses legal defense costs as well, which can arise when a policyholder faces lawsuits related to the covered incidents. This is essential for preserving the financial stability of the policyholder, allowing them to manage potentially significant expenses that could arise from litigation or settlement costs. Therefore, the defining feature of liability insurance is its focus on protecting the policyholder against claims made by others due to their actions.

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Medical expenses for the policyholder

Loss of income due to accidents

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