Texas Adjuster Practice Test

What does liability insurance primarily cover?

1. Direct losses to personal property

2. Claims against the insured for negligence

3. Medical expenses for the insured

4. Damage to commercial property

The correct answer is: Claims against the insured for negligence

Liability insurance primarily covers claims against the insured for negligence. This type of insurance is designed to protect individuals or businesses from legal liabilities that may arise as a result of accidents or incidents where they are found to be at fault. If someone is injured or their property is damaged due to the actions or negligence of the insured, liability insurance would provide coverage for legal defense costs and any settlements or judgments awarded to the injured party. In contrast, direct losses to personal property fall under property insurance rather than liability coverage. Medical expenses for the insured typically would be covered by health insurance instead of liability insurance. Damage to commercial property involves property damage coverage, which is also outside the realm of liability insurance. Understanding the distinctions between liability insurance and other types of insurance is crucial for anyone managing risk or dealing with insurance claims.