What type of insurance covers third-party claims for bodily injury and property damage?

Liability insurance is specifically designed to cover third-party claims for bodily injury and property damage. This type of insurance protects individuals or businesses from the financial consequences that may arise when they are held legally responsible for harming someone else or causing damage to their property.

When someone files a claim against the insured party due to an accident or an incident that causes injury or damage to another person’s belongings, liability insurance steps in to pay for legal fees and any settlements or judgments awarded to the claimant, up to the coverage limits of the policy. This protection is crucial since legal claims can result in significant financial burdens.

In contrast, comprehensive insurance primarily covers damage to the insured’s vehicle from non-collision-related incidents, such as theft, vandalism, or natural disasters. Collision insurance covers damages to the insured’s vehicle resulting from a collision with another vehicle or object. Subrogation insurance is a process, rather than a type of policy, where an insurance company seeks to recover expenses from the party at fault after paying a claim. Therefore, none of these alternatives fulfill the specific function of covering third-party claims like liability insurance does.