What is liability coverage in personal lines insurance?

Liability coverage in personal lines insurance is designed to protect the insured from claims arising from injuries to another party or damage to someone else's property. This type of coverage is essential because it provides financial protection in the event that the insured is found legally responsible for causing harm or damage. It typically covers legal fees, medical expenses, and any settlements or judgments awarded in a lawsuit. The primary goal of liability coverage is to safeguard the insured’s financial interests in situations where they may be held accountable for adverse events affecting third parties.

In contrast, the other options focus on different aspects of insurance coverage. Coverage for personal property loss or damage pertains to protecting the insured’s own belongings, while insurance that covers loss of rental income relates specifically to investment properties. Protection against fire or theft of property is more specific to homeowners or renter's insurance concerning the insured’s own assets. Each of these coverages serves distinct purposes, but they do not address the specific risks associated with liability exposures as effectively as liability coverage does.