Liability insurance
Coverage that pays for damage or injuries you cause to others.
Full definition
Liability insurance covers costs you become legally responsible for when you cause harm to other people or their property. In auto insurance, this means covering medical bills and property damage for others if you cause an accident. In home insurance, it covers injuries that happen on your property. Liability coverage does NOT cover your own injuries or property damage — that requires separate coverage.
Real-world example
You run a red light and hit another car. The other driver's medical bills total $45,000. Your $100,000 liability coverage pays it. Your own injuries are covered by your medical payments/PIP coverage.
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Coverage that pays for damage or injuries you cause to others.
Related terms
- Full coverage
A package including liability, collision, and comprehensive coverage.
- Umbrella insurance
Extra liability coverage that kicks in when your home or auto policy limits are exceeded.
- Coverage limit
The maximum amount your insurer will pay for a covered claim.