What does "third-party liability" insurance cover?

"Third-party liability" insurance specifically covers damages that the insured is legally obligated to pay to a third party due to negligence. This type of insurance is designed to protect the policyholder from financial losses resulting from claims made against them by individuals or entities who have suffered harm or damage as a result of the insured's actions or inactions.

For example, if an insured individual is found responsible for injuring another person in an accident or causing damage to someone else's property, third-party liability insurance will typically cover the costs associated with those claims, such as legal fees, settlements, or judgments.

This coverage is crucial in a variety of situations, including automobile accidents and other scenarios where one's negligence may cause harm to others. It ensures that the insured can meet their legal obligations without facing potentially devastating financial repercussions.

In contrast, the other options focus on different types of coverage, such as personal property damages, medical expenses for the insured, or costs for legal representation to protect the insured's interests, none of which address the core function of third-party liability insurance.