Liability insurance claims are paid only if the insured is legally responsible for damages to another party.

• A. True
• B. False
• C. Only if policy explicitly states
• D. Only for property damages

Answer: (A)

Liability insurance is designed to protect you for losses you are legally obligated to pay to others. The insurer steps in to pay damages or settlements up to the policy limits only when a court or settlement determines you are legally responsible for bodily injury or property damage. In other words, the coverage attaches to the existence of legal liability, not merely to the fact that something happened. If you’re not legally responsible, there’s no payment for damages (though the insurer may still defend the claim). Because liability coverage covers both bodily injury and property damage caused by the insured, the principle applies across those types of losses.